China issues $8.2 billion in Hong Kong to stabilize trade tensions

The People's Bank of China (PBOC) said it will bid for central bank bills in Hong Kong on Friday, totaling RMB 60 billion (US$8.2 billion), marking the second time this year the policy tool is used to stabilize Yuan, which is related to Yuan's stability. U.S.

PBOC said it will pass the three-month bill in the three-month bill and RMB 20 billion in the year bill through the year bill tender for the Hong Kong Monetary Authority (HKMA) one-year bill. .

The issuance aimed at "rich in Hong Kong's high-grade people's financial products and improve Hong Kong's dime production curve" said the PBOC, when she revealed the move on Wednesday.

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Since January, China's central bank has taken a series of measures to support Hong Kong's position as a global hub for the maritime renminbi, including the bank's 100 billion yuan trade financing facility and the new maritime renminbi repurchase agreement (Repos) New plan.

PBOC Governor Pan Gongsheng said last month that he will work with the city’s de facto central bank HKMA to encourage “more high-quality businesses to list and issue bonds in Hong Kong” and issue government bonds that are underpaid by Yuan and Debt central bank periodic bills.

Terry Yang, partner at law firm Clifford Chance, said: “The PBOC’s dollar-timed bill has been approved through the CMU in Hong Kong, enabling international investors to obtain government credit (mainland China) under common law-based market infrastructure. . ” He added that the Chinese government is leveraging the city’s unique characteristics to sustain the use of national dollar, including the ability to use Chinese bonds for mortgage and repurchase purposes.

PBOC issued a 60 billion yuan bill in Hong Kong last month. The product is the largest single issuance on the offshore unit bills tendered by the city by PBOC and marks its first billing in January. It's over 2.16 times.

Natixis economists say China is determined to prevent excessive pressure on the yuan from depreciating. Photo: DPA Alt = China is determined to prevent excessive depreciation pressure from the yuan, according to senior Natixis economist. Photo: DPA>

When the yuan faces greater depreciation pressure to demonstrate exchange rate stability, the PBOC has issued several central bank bills. Last year, it issued 12 offshore central bank bills in Hong Kong, totaling RMB 275 billion, according to central bank data.

"China is determined to prevent excessive depreciation pressures in an uncertain Fed rate path and geopolitical risk," said Gary Ng, senior economist at Natixis, Hong Kong. "However, this does not mean that the yuan is not allowed to depreciate as long as its movements are with others." Non-USD major currencies are consistent.”

U.S. President Donald Trump imposed an additional 10% tariff on Chinese goods earlier this month and sent the yuan to record low prices. PBOC has adjusted its approach to setting the daily midpoint and has issued a Maritime Central Bank bill to increase the shortened cost of the small dollar.

Meanwhile, China's Ministry of Finance plans to sell RMB-denominated bonds worth 12.5 billion next week, with tenors ranging from two to 30 years.

HKMA CEO Eddie Yue Wai-Man said in a blog post last week that the general interest rate for elements has been lower than other major currencies recently than the appeals of other major currencies.

In the first three quarters of 2024, the issuance of Hong Kong dollar-timed bonds soared 35% to HK$776.8 billion (US$99.7 billion), according to HKMA data.

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