HK relaxes yuan restrictions
Hong Kong will let nonresidents purchase an unlimited amount of yuan, as it seeks to defend its position as the global hub for international finance in the currency.
While conversion at the offshore rate will start on Aug 1, buyers will need permission to send the currency into the mainland, Hong Kong Monetary Authority Deputy Chief Executive Eddie Yue told a news conference on Wednesday. The 20,000 yuan ($3,128) daily conversion quota on the city’s permanent residents at the onshore rate will remain, and a maximum of 80,000 yuan can be sent into the mainland a day, he said.
Hong Kong’s biggest banks have been calling for a relaxation of the restrictions on the city’s yuan business as competition from London and Singapore intensifies. The halt in the yuan’s appreciation against the US dollar this year has damped appetite among residents for assets denominated in the Chinese currency, with the city’s yuan deposits dropping 35 billion yuan in the first five months to 554 billion yuan.
“This will raise Hong Kong’s edge in the competition with other financial centers,” said Ngan Kim-man, head of the renminbi business strategy and planning department of Hang Seng Bank Ltd.
The People’s Bank of China has already ruled out the possibility of raising yuan conversion quotas for Hong Kong residents, according to Hu Xiaolian, the central bank’s deputy governor on June 30. Allowing nonresidents to buy yuan is feasible “as long as it doesn’t involve the onshore yuan”, Hu said.
While Hong Kong was selected as the nation’s major offshore yuan trading hub under the 12th Five-Year Plan (2011-15), its status is being challenged. UK Chancellor of the Exchequer George Osborne in January called on London to expand its yuan trading. The British capital had 109 billion yuan of customer and interbank deposits and that is “growing strongly”, according to an April 18 report by research firm Bourse Consult.