China's Efforts to Squeeze Bets Against the Yuan Haven't Achieved Much
- Yuan interbank rates in Hong Kong surged to records this month
- Outflows from China increased to $158.7 billion in December
Guards stand outside the People's Bank of China in Beijing, China.
Photographer: Nelson Ching/BloombergThis article is for subscribers only.
The cost of betting against the yuan in Hong Kong fell back to where it was at the start of the year, highlighting the shortcomings of China’s attempt to starve the offshore market of funds while flooding domestic banks with cash to support the economy.
The Hong Kong InterBank Offered Rate for three-month yuan loans fell to 4.87 percent last week, 59 basis points lower than the Dec. 31 fixing and down from a record 10.42 percent on Jan. 12. The comparable rate in Shanghai is 3.10 percent and Chris Morrison at $965 million hedge fund Omni Partners says funds will flow offshore, providing a pool of yuan to be borrowed and sold, unless China imposes draconian capital controls.