- Interbank lending rates in Hong Kong--a center offshore trading for the yuan-- climbed Tuesday, possibly from efforts by China's central bank to prevent too much erosion of the yuan, the Wall Street Journal reports, citing several analysts.
- The overnight cost of borrowing yuan for Hong Kong banks surged to 5% from 1.745% Tuesday to its highest level since May.
- There have been times in the past when Chinese authorities increased interbank lending rates during periods of currency depreciation pressure to deter traders from making bearish bets, the analysts said.
- Raising short-term rates makes it more expensive to make bets against the yuan using borrowed funds.
- Though the weaker currency helps to boost exports, China is also seeking stability, according to the analysts.
- The yuan is up 0.1% against the U.S. dollar trading at 6.92 yuan to the greenback. YTD, the yuan has weakened about 6% against the dollar.
- Previously: U.S. Treasury said to be still concerned about yuan depreciation: Reuters (Oct. 8)
- ETFs: CYB, CHIX, CNY, FXCH, FXI, YINN, YANG, MCHI, GXC, FXP, PGJ, CN, TDF, CHN, CXSE, XPP, FCA, YAO, YXI, KGRN, FLCH
- Related Stocks: OTCPK:HSNGF, OTCPK:HSNGY, OTCPK:GULRF, OTCPK:GULRY
- Now read: Emerging market stocks set for worst week since February
Original article