MNI BRIEF: PBOC To Ensure Yuan Stable, HK CNH Hub - Pan
MNI (BEIJING) - The People’s Bank of China will prevent any risk of the yuan exchange rate overshooting and enhance Hong Kong’s role as an offshore hub, said governor Pan Gongsheng on Monday, according to a statement on the PBOC’s website.
The yuan has performed resiliently as non-dollar currencies depreciated against a strong greenback, Pan said, noting the bank is “confident, well-positioned, and capable of maintaining the stable operation of the foreign exchange market.”
He said the PBOC will “resolutely” correct pro-cyclical behavior in the market, address actions that disrupt market order, and maintain the yuan at a reasonable and balanced level. (See MNI: PBOC Underpinning Yuan, But US Tariffs Key - Advisors)
He pointed out the central bank will take measures to strengthen the Hong Kong offshore yuan market, including the introduction of an offshore bond repurchase (repo) business under the Bond Connect scheme, enriching liquidity management tools for investors and enhancing the appeal of yuan-denominated bonds. The Bank is also preparing tolaunch offshore yuan-denominated treasury futures in Hong Kong, he continued.
Meanwhile, authroities will also launch cross-border bond repo services at an appropriate time in the future, and the Bank will work with the Hong Kong Monetary Authority (HKMA) to introduce a yuan trade financing liquidity arrangement with a total quota of CNY100 billion in a bid to provide low-cost funds, he announced.