Overseas Investors Cover Their Short CNY Positions

Overseas portfolio investors short the yuan have increased their CNY holdings, as weakness in the currency failed to trigger a phased outflow of capital. Strong overseas demand for yuan bonds amid the sluggish global economic recovery and CNY's depreciation has made yuan assets more attractive, according to a Hong Kong private equity fund manager. Swap Connect also facilitates overseas investors holding domestic yuan bonds, as they do not need to reduce their holdings due to the widening China-U.S. interest-rate spread, the manager said. The net purchase of domestic bonds by foreign investors in June continued from May's relatively high level, while fx settlement and sales showed higher surplus than the previous month. (Source: 21st Century Business Herald)