Move set to lift yuan's appeal
By Zhang Fengming |
August 18, 2010, Wednesday
|
Print Edition
Print Edition
CHINA allows yuan accumulated overseas to flow back to its borders as it bids to make the currency more appealing globally.
The yuan accumulated overseas through cross-border trade settlements and central bank swaps are allowed to be channeled back into the Chinese mainland's interbank bond market under a trial program, the People's Bank of China said in a statement yesterday.
Three types of financial institutions - yuan clearing banks in Hong Kong and Macau, overseas central banks that have currency swap deals with China and overseas banks involved in the yuan-backed cross-border trade settlement - would be allowed to invest in the interbank bond markets within an investment quota set by the central bank.
The move aims to allow more investment options for overseas holders of the yuan and increase its popularity.
The limited investment options of the yuan is one of the impediments for the currency to penetrate overseas markets further.
China has since unveiled a package of measures to expand the investment options for the yuan.
In late June, it expanded the trial program on yuan-backed cross-border trade settlement to 20 provinces and municipalities from Shanghai and four cities in south China's Guangdong Province.
The trial now covers products trade to services trade in all markets, and a previous limited overseas coverage has been scrapped.
Yesterday's move is a follow-up since the cross-border trade yuan settlement debuted in July 2009.
The PBOC said demand from banks and companies to settle cross-border trade in yuan has been growing.
The rise of the yuan since July 2005 is also making it popular overseas on higher investment returns. It has gained 23 percent since July 2005 when China depegged the yuan from the United States dollar.
The yuan accumulated overseas through cross-border trade settlements and central bank swaps are allowed to be channeled back into the Chinese mainland's interbank bond market under a trial program, the People's Bank of China said in a statement yesterday.
Three types of financial institutions - yuan clearing banks in Hong Kong and Macau, overseas central banks that have currency swap deals with China and overseas banks involved in the yuan-backed cross-border trade settlement - would be allowed to invest in the interbank bond markets within an investment quota set by the central bank.
The move aims to allow more investment options for overseas holders of the yuan and increase its popularity.
The limited investment options of the yuan is one of the impediments for the currency to penetrate overseas markets further.
China has since unveiled a package of measures to expand the investment options for the yuan.
In late June, it expanded the trial program on yuan-backed cross-border trade settlement to 20 provinces and municipalities from Shanghai and four cities in south China's Guangdong Province.
The trial now covers products trade to services trade in all markets, and a previous limited overseas coverage has been scrapped.
Yesterday's move is a follow-up since the cross-border trade yuan settlement debuted in July 2009.
The PBOC said demand from banks and companies to settle cross-border trade in yuan has been growing.
The rise of the yuan since July 2005 is also making it popular overseas on higher investment returns. It has gained 23 percent since July 2005 when China depegged the yuan from the United States dollar.
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