China’s Bond-Market Opening May Spur Demand for Yuan

China’s opening of its bond market to foreign banks holding yuan will boost global demand for the currency and enhance its potential as a foreign-exchange reserve asset, Citigroup Inc. and Credit Agricole CIB said.

The People’s Bank of China said yesterday it will let overseas financial institutions invest yuan holdings in the interbank bond market, while keeping limits on the conversion of foreign currency for such investments. The program will start with central banks and clearing banks for cross-border yuan settlement, according to a statement on its website.