HONG KONG, Nov 28 — Hong Kong’s status as the world’s largest offshore yuan hub is intact as its trade settlement and lending in the Chinese currency climb, according to Hong Kong Monetary Authority Chief Executive Norman Chan.
Banks in Hong Kong handled 5 trillion yuan (RM2.7 billion) of trades settled in the Chinese currency in the last 10 months, up 73 per cent from a year earlier, Chan told reporters in Beijing yesterday. The city’s outstanding yuan loans totalled almost 170 billion yuan at the end of October, he said.
China is promoting usage of the yuan in global trade and finance by appointing clearing banks for the currency in cities including London, Seoul, Toronto and Sydney as well as starting direct trading between the yuan and major currencies including the Australian dollar and euro. The yuan ranked seventh for usage in global payments last month, according to the Society for Worldwide International Financial Telecommunications.
Chan said he saw no threat to Hong Kong’s role from Shanghai. Asked about the Occupy Central movement, he said the pro-democracy protests could hurt business confidence if they continued for a long time.
“It’s a year of harvest for Hong Kong in the yuan business,” said Chan. “As China’s policies become more open, meaning less restrictions on capital flows, Hong Kong will benefit the most as the largest and most vibrant yuan centre.”
RQFII quota
The daily average turnover of Hong Kong’s real-time yuan payments system has doubled to 800 billion yuan in October, from 400 billion yuan a day in 2013, Chan said. The city’s savings in the Chinese currency totaled 944.5 billion yuan by the end of September, according to HKMA data. With the central bank due to release last month’s deposit figures later today, Chan said the total is yet to reach 1 trillion yuan.
The currency in Hong Kong fell 0.37 per cent this week, the most since the five days ended October 3, after China cut benchmark interest rates for the first time since 2012. It traded at 6.1561 per dollar as of 10:19 am local time.
Hong Kong has assigned all of its quota to invest yuan in China’s onshore financial markets and Chan said the HKMA’s request for a higher limit received a “positive response” from the State Administration of Foreign Exchange in meetings yesterday.
Hong Kong has 270 billion yuan of allocations under the Renminbi Qualified Foreign Institutional Investor programme, the world’s largest, according to data compiled by Bloomberg. The UK, Singapore, France, South Korea, Germany, Qatar, Canada and Australia have 500 billion yuan of quota in total. — Bloomberg
