Yuan Deposits in Hong Kong Climb 15.6% to Record in July as Market Opens
Yuan deposits in Hong Kong climbed 15.6 percent in July to a record, the biggest gain since April 2008, after China eased restrictions to promote greater use of the currency in global trade and finance.
Savings in the currency have risen 65 percent this year to 103.7 billion yuan ($15.2 billion), the highest level since the Hong Kong Monetary Authority allowed yuan accounts to be set up in February 2004. The yuan has gained 0.3 percent since China’s central bank said June 19 it will allow greater flexibility in the exchange rate.
The People’s Bank of China and the HKMA signed an agreement on July 19 lifting limits on companies buying or selling yuan in Hong Kong. Overseas financial institutions and central banks would be allowed to invest yuan holdings in China’s interbank bond market, the PBOC said on Aug. 17. Banks including Citigroup Inc. and HSBC Holdings Plc have said they plan to apply for licenses to do so.
Yuan deposits in Hong Kong come from trade settlements denominated in the currency and from residents who are allowed to buy as much as 20,000 yuan per day with foreign currencies. Cross-border flows of yuan funds are subject to PBOC approval.
Standard Chartered Plc said total foreign-exchange trading volume involving the currency in Hong Kong amounts to $150 million a day, in a report released on Aug. 27.
Yuan settlement of trade between Hong Kong and China more than doubled to 13.2 billion yuan in June from a month earlier, according to revised HKMA figures.
To contact the reporters on this story: Andrea Wong in Hong Kong at at awong268@bloomberg.net;
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