HK's treasury body set to compile offshore yuan interest rate fixing
Source: Bloomberg News |
April 26, 2013, Friday
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Print Edition
Print Edition
HONG Kong's Treasury Markets Association will start compiling an interbank interest rate fixing for offshore yuan in June amid rising demand for loans in the currency outside of the Chinese mainland.
The Hong Kong Monetary Authority will also relax yuan capital rules for local banks by scrapping a limit on net open positions and a minimum requirement for the lenders' liquid assets in the currency, Chief Executive Norman Chan said yesterday. Instead, the same rules that apply to other currencies will be applicable to offshore yuan, he said.
Currently, 13 banks including HSBC Holdings Plc and JPMorgan Chase & Co publish their yuan interbank offered rates through the TMA each trading day. Yesterday's one-year yuan interbank rate ranged from 2.7 percent to 3 percent, TMA said. The new fixing will be based on contributions from 15 to 18 banks, TMA said.
"After having detailed discussions with the industry and having a trial offshore yuan fixing system in place for more than a year, the HKMA thinks that the timing is now mature for Hong Kong," Chan said. The fixing system "will greatly promote the yuan lending market and the development of financial products that are related to interest rates," he said.
The tenors of the yuan interbank fixing system will range from overnight to one year, he said. Daily volume of interbank lending in the currency is at 8 billion yuan (US$1.3 billion), according to TMA. When calculating the offered rate, the TMA suggested omitting the three highest and lowest contributions, and calculating the rate by taking the arithmetical average of the rest.
Hong Kong holds the world's biggest pool of yuan deposits outside the mainland as the city is designated as a hub to promote the currency's usage in global trade and finance. The Qianhai district of Shenzhen, a city that borders Hong Kong, was picked as the testing ground for cross-border yuan loans in which 15 banks based in Hong Kong provided about 2 billion yuan (US$324 million) to companies in January.
The fixing will "support the further growth of the offshore yuan loan market by providing a reliable benchmark for the pricing of loan facilities," Peter Pang, chairman of the TMA executive board and deputy chief executive at the HKMA, said in a statement yesterday
The Hong Kong Monetary Authority will also relax yuan capital rules for local banks by scrapping a limit on net open positions and a minimum requirement for the lenders' liquid assets in the currency, Chief Executive Norman Chan said yesterday. Instead, the same rules that apply to other currencies will be applicable to offshore yuan, he said.
Currently, 13 banks including HSBC Holdings Plc and JPMorgan Chase & Co publish their yuan interbank offered rates through the TMA each trading day. Yesterday's one-year yuan interbank rate ranged from 2.7 percent to 3 percent, TMA said. The new fixing will be based on contributions from 15 to 18 banks, TMA said.
"After having detailed discussions with the industry and having a trial offshore yuan fixing system in place for more than a year, the HKMA thinks that the timing is now mature for Hong Kong," Chan said. The fixing system "will greatly promote the yuan lending market and the development of financial products that are related to interest rates," he said.
The tenors of the yuan interbank fixing system will range from overnight to one year, he said. Daily volume of interbank lending in the currency is at 8 billion yuan (US$1.3 billion), according to TMA. When calculating the offered rate, the TMA suggested omitting the three highest and lowest contributions, and calculating the rate by taking the arithmetical average of the rest.
Hong Kong holds the world's biggest pool of yuan deposits outside the mainland as the city is designated as a hub to promote the currency's usage in global trade and finance. The Qianhai district of Shenzhen, a city that borders Hong Kong, was picked as the testing ground for cross-border yuan loans in which 15 banks based in Hong Kong provided about 2 billion yuan (US$324 million) to companies in January.
The fixing will "support the further growth of the offshore yuan loan market by providing a reliable benchmark for the pricing of loan facilities," Peter Pang, chairman of the TMA executive board and deputy chief executive at the HKMA, said in a statement yesterday
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