Hong Kong Yuan Deposits Climb to Record on Bets Currency to Gain

Yuan deposits in Hong Kong climbed to a record in February as a brightening outlook for the world’s second-largest economy spurred speculation China’s currency would appreciate.

Savings rose 28 billion yuan ($4.5 billion) from the previous month to 652 billion yuan, the Hong Kong Monetary Authority said in a statement on its website today. That surpassed the previous record of 627.3 billion reached at the end of November 2011. That was a fifth straight monthly gain. Taiwan banks started interbank yuan trading in February and began taking in yuan deposits, offering interest rates that were double those available in Hong Kong.

“There’s been stronger expectations of yuan appreciation since the start of the year,” said Nathan Chow, a Hong Kong-based economist at DBS Group Holdings Ltd. “Even though Taiwan is offering higher interest rates, it’s unlikely to be a big drain on Hong Kong’s pool of yuan.”

The yuan reached a 19-year high of 6.2095 per dollar in Shanghai on March 25. The currency was little changed at 6.2143 per dollar today. China’s Purchasing Managers’ Index for manufacturing for March will be 51.2, indicating a sixth month of expansion, according to the median estimate in a Bloomberg News survey of economists before official data on April 1.

The currency will appreciate 1.8 percent to 6.12 per dollar in 2013, almost double last year’s 1 percent advance, according to the median estimate in a Bloomberg survey of economists.

Hong Kong handled 221.7 billion yuan of trade settled in the Chinese currency in February, a 17.4 percent decrease from January, according to HKMA data. The decline was due to changes in the timing of Chinese New Year holidays, which fell in February this year and January in 2012, a spokeswoman at the HKMA wrote in an e-mailed statement.

Before it's here, it's on the Bloomberg Terminal.