Nov. 29 (Bloomberg) -- Yuan deposits in Hong Kong rose by the most since April 2011 to a record in October amid bets China will step up efforts to increase the global usage of the currency and implement policies to spur growth.
Savings rose 52 billion yuan ($8.5 billion) from September to 781.6 billion yuan, the Hong Kong Monetary Authority said in a statement on its website today. The city handled 315 billion yuan of trade settled in the Chinese currency in October, versus 332 billion the previous month.
The yuan appreciated 0.45 percent in October as China expanded yuan-denominated investment programs to the U.K. and Singapore. The ruling Communist Party leaders met this month to discuss policies for the coming years, after the Federal Reserve maintained its $85 billion monthly purchases of bonds.
“Funds are going into the yuan after it’s clear that the Fed won’t taper so soon and on bets China will accelerate reforms that are good for growth,” said Ho Man Chun, an economist and strategist at Bank of Communications Co.’s Hong Kong branch. “There has been increasing demand for renminbi assets.”
China and the U.K. will begin direct trading between the yuan and the British pound, Chancellor of the Exchequer George Osborne said on Oct. 15. China also approved an 80 billion yuan quota allowing investors in London to buy onshore assets. Singapore inked a similar agreement with China a week later.
The People’s Bank of China will “basically” end normal intervention in the foreign-exchange market and broaden the yuan’s daily trading limit, Governor Zhou Xiaochuan wrote in an article in a guidebook explaining reforms outlined following a Communist Party meeting that ended Nov. 12.
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