Yuan’s Offshore Premium Ends as HKMA Ensures Supply
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The premium to buy yuan outside China disappeared as Hong Kong’s central bank set up a fund to ensure supply of the currency for cross-border trade settlements.
Yuan traded in Hong Kong at 6.6510 per dollar as of 12:10 p.m. local time, a discount to the 6.6333 rate in Shanghai, data compiled by Bloomberg show. Offshore trading began in July and the Hong Kong rate has on average been 0.8 percent stronger than that on the mainland since Bloomberg began tracking the data four months ago. Hong Kong banks will be allowed to tap the 20 billion yuan ($3 billion) fund from next month should the city’s yuan clearing bank run out of funds set under a quarterly quota.