Bank of China Begins Offering Yuan Deposits, Currency Exchange in New York
The Bank of China Ltd., the nation’s fourth-largest lender by assets, said U.S. branches began offering yuan deposit, exchange, remittance and trade finance services last month.
Personal customers in the New York area can change as much as $4,000 a day into yuan, up to a maximum of $20,000 a year, according to a statement posted on the New York Branch’s website. Corporate service in yuan is available in New York and Los Angeles, the bank said.
China is allowing greater use of its currency for cross- border transactions, seeking to reduce reliance on the dollar after Premier Wen Jiabao said in March he is “worried” about holdings of assets denominated in the greenback.
“This is another incremental step in the long-term goal of internationalizing the yuan,” said Daniel Hui, a currency strategist at HSBC Holdings Plc in Hong Kong. Stronger demand for the currency will help strengthen the offshore spot rate, he added.
Yuan traded offshore rose 0.08 percent to 6.5785 per dollar as of 4:14 p.m. in Hong Kong, compared to 6.5835 yesterday, according to data compiled by Bloomberg. The onshore rate climbed 0.22 percent to 6.6052, according to the China Foreign Exchange Trade System.
Hong Kong’s yuan deposits jumped 28.8 percent to a record 279.6 billion yuan ($42.3 billion) in November from a month earlier as policy makers continue to promote the city as an offshore renminbi center, according to the monetary authority. The yuan is a denomination of China’s currency, the renminbi.
Hong Kong Vs New York
Hong Kong will continue to be the "key" offshore centre for offshore yuan trading, said Patrick Bennett, a Hong Kong-based strategist at Standard Bank Group Ltd.
“It’s a long path to yuan internationalization, it will not happen overnight, but it’s certainly happening,” Bennett said. “Hong Kong is and will be the key offshore centre.”
China Construction Bank Corp., which helped organize the biggest number of bond sales in China last year, forecasts an increase in yuan-denominated trade transactions. Trade deals settled in the currency may rise to $3 trillion a year by 2015 from the current $19 billion a year, the bank said Nov. 23.
The Bank of China, in its statement, said personal customers can only open yuan accounts in the U.S. with remittances or with yuan the bank sells them. The bank can’t currently handle cash deposits or withdrawals, according to the lender.