HONG KONG (Reuters) – Hong Kong will launch a new yuan-denominated trade finance scheme and expand the hours and scope of its Bond Connect program for mainland Chinese investors, Eddie Yue, chief executive of the Hong Kong Monetary Authority, said on Monday.
The announcement came alongside others made by China’s central bank governor Pan Gongsheng at a business conference, including pledges to help Hong Kong secure cheap yuan financing in the territory and measures to support the yuan, which has fallen to 16-month lows.
Beijing will support Hong Kong in launching a trade finance scheme using 100 billion yuan ($13.64 billion) in one-, three- and six-month currency swaps, Yue, head of Hong Kong’s de facto central bank, told reporters on the sidelines of Asia. Hong Kong Financial Forum.
The two central banks have a currency exchange agreement totaling 800 billion yuan.
Under the new facility, banks can exchange their Hong Kong dollars for yuan funding with the HKMA at interest rates linked to onshore rates, providing Hong Kong banks with a stable source of yuan funding at a relatively lower cost, Yue said.
Yue said the settlement deadline for the Bond Connect scheme would be extended to 16:30 (08:30 GMT) and extended to bonds denominated in US dollars and euros, in addition to yuan bonds.
The HKMA will also promote yuan repurchase agreements, allowing international investors to use onshore bonds as collateral for yuan assets in Hong Kong, from February 10, he said.
($1 = 7.3316 renminbi)
