Offshore Yuan Deposits Set to Increase on Stronger Yuan: Herald

Offshore yuan deposits are expected to further increase due to the recent appreciation of the yuan and the wide interest spread as China is unlikely to cut interest rates in the short term, the 21st Century Business Herald reported citing Lin Junhong, a research head at the Shanghai Commercial Bank. In September, yuan deposits in Hong Kong increased by 1.6% m/m to CNY855.9 billion, a record high in nearly six years. The further deepening of cross-border linkages such as those for stocks and bonds also drove demand for offshore yuan, though it is only the first stage of yuan internationalization as funds are still under closed-loop management, the newspaper said citing Ba Shusong, the chief China economist of the Hong Kong Stock Exchange. Ba suggested the authority should consider cross-border transactions in yuan or keeping the funds after assets sold in Hong Kong in the future, according to the newspaper.