Most Yuan Interbank Rates Rise in Hong Kong as PBOC Curbs Supply
- Reserve requirements to include overseas banks' yuan deposits
- Tighter liquidity boosts cost of shorting yuan offshore
The image of former Chinese leader Mao Zedong is displayed on a one-hundred yuan banknote in an arranged photograph at the Bank of China Hong Kong Ltd. headquarters in Hong Kong, China, on Thursday, Nov. 12, 2015. The People's Bank of China's 2015 edition of the 100 renminbi banknote, with new anti-counterfeiting features, starts circulating today.
Photographer: Xaume Olleros/BloombergThe cost of borrowing yuan for a week or more increased in Hong Kong’s interbank market after China’s central bank said it will impose reserve-requirement ratios on yuan deposited onshore by overseas financial institutions from Jan. 25.
The one-week Hong Kong interbank offered rate for loans climbed 370 basis points to 11.9 percent on Monday, while the one-month rate rose 251 basis points to 11.84 percent, Treasury Markets Association fixings show. They surged to respective records of 33.79 percent and 15.74 percent last week as intervention by the People’s Bank of China to support the yuan in offshore trading tightened the supply of the currency.