PBOC Issues USD3 Billion of Yuan-Denominated Central Bank Bills in Hong Kong
Du Chuan
/SOURCE : yicai
PBOC Issues USD3 Billion of Yuan-Denominated Central Bank Bills in Hong Kong

(Yicai Global) May 15 -- China's central bank has issued three-month and one-year central bank bills totaling CNY20 billion (USD3 billion) in Hong Kong with a bid-winning interest rate of 3 percent and 3.1 percent, respectively, according to a statement.

The move marks the third time that the People's Bank of China has issued such bills in the special administrative region. The first and second times took place in November and February.

The total bidding for this issuance exceeded CNY100 billion and subscribers included offshore investors such as commercial lenders, funds, investment banks and international financial institutions, Yicai Global learned.

The issuance will enable a supply and demand balance for yuan-denominated funds and reduce the yuan liquidity in Hong Kong, Zhao Qingming, chief economist at China Financial Futures Exchange Research Institute, told Yicai Global. This will help price the yuan-denominated assets in the offshore market and indicate a stable yuan exchange rate, he added. 

Central bank bills are a tool used by a country's central bank to adjust monetary liquidity in the market. Issuance of such bills reduces liquidity in the market and their expiration injects liquidity. The PBOC issued yuan-denominated bills in Hong Kong to directly adjust the liquidity in the Hong Kong offshore yuan market, market insiders noted, saying the issuance indicates that the PBOC aims to stabilize the exchange rate.

The yuan's exchange rate in the Hong Kong offshore market remained stable on the day of issuance after greatly fluctuating in previous days.

There will not be a trend of devaluation in the yuan exchange rate and the dollar-yuan rate will not go above 7, according to a report from Northeast Securities.

The Chinese economy is expected to be stable and will not decline beyond expectations seen in terms of economic fundamentals, while the country's existing monetary policies are moderately loose, the report stated. 

Editor: Liao Shumin

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Keywords: Central Bank Bills , PBOC