Chillin' out till it needs to be funded
zyakaira notes: China just recently announced the acceptance of Yuan for global trade with the opening of a window in Hongkong allowing payments in the city and mainland in Yuan. Meanwhile since July 2005 scrapping of the APM, the Yuan has moved up 21% till end 08
The phenomenon of Fixed Income trading though new to the continent has considerably higher volumes in India, while other countries in the region continue to swim in USD notes and even barter to hide exposure to their weak local currency. China is more concerned about pushing Yuan for international trade now, after having seen the greater threat to its $2.1 trillion USD reserves.
Oil continues to lag this week because of the commodities default threat from China, which is showing up in addition to the precarious credit situation in China as a teetering fault in China’s market policies and point to a long winter for the nation. However, these domestic measures to strengthen the Yuan are being seen for the first time in the mostly discontinuous or fractured China policy positions that believe in knee jerk reactions without notice and in direct antagonism to other BRIC and nations and indeed the west. In those terms, this gentler unwinding, is welcome esp if they are able to travel and make an international mark in investments in Russia and China
Bloomberg:: In 2009, Hong Kong’s yuan deposits increased by 932 million yuan to 54.4 billion yuan in June, official figures show.
Bank of China Ltd., Export-Import Bank of China, Bank of Communications Ltd. and China Construction Bank Corp. are also among Chinese banks that have sold yuan debt in the city.
HSBC Holdings Plc and Bank of East Asia Ltd. sold 6 billion yuan of bonds in Hong Kong this year. HSBC Bank (China) Co., the mainland unit of HSBC, said yesterday it received orders for 4.4 times the amount of debt it planned to sell, allowing it to raise 2 billion yuan. The two-year notes pay an annual interest rate of 2.6 percent compared with 0.8 percent on a one-year deposit in Hong Kong.
China may sell up to 100 billion yuan of government bonds in Hong Kong over several stages, the city’s English language Standard newspaper reported today before the official announcement was made, citing people it didn’t identify.Hong Kong is seeking to become an offshore center for the yuan after China’s government in April gave Shanghai until 2020 to become a global financial hub. The issuance announced today is “a new milestone” for developing yuan business in the city, Hong Kong’s government said.“Six billion yuan is a small amount on the mainland market, but it shows the central government’s support for Hong Kong as an international financial center,” said Zhao Qingming, an analyst at China Construction Bank Corp. in Beijing. “It expands the channels of yuan usage in Hong Kong by offering high-yield, low-risk investment products.”