Hong Kong banks raise deposit rates to boost offshore yuan pool
Published on Apr 10, 2014 12:29 PM
HONG KONG (Reuters) - Banks in Hong Kong are now offering higher interest rates than their mainland cousins on new renminbi (RMB) currency deposits as the recent sharp fall in the Chinese currency dampened investor interest in holding Chinese assets.
These aggressive measures will help bolster the offshore yuan liquidity pool which is under pressure from the weakness of the "redback" and the emergence of more offshore yuan centres.
With HSBC and Bank of China Hong Kong, the two biggest banks involved in the offshore yuan business, leading the way in raising deposit rates, smaller banks are likely to follow suit, enhancing the allure of holding Chinese currency deposits.
HSBC, a leading bank in underwriting offshore yuan bonds, is providing an annual return as high as 3.8 per cent for one-month yuan deposits with a minimum deposit amount of only 20,000 yuan (S$4,016), the bank told Reuters.
To continue reading, log in if you are a subscriber
Enjoy 2 weeks of unlimited digital access to The Straits Times. Get your free access now!