The premium of yuan to buy outside of China disappeared

The premium of yuan to buy outside of China disappeared as Hong Kong's central bank established a fund to guarantee the supply of currency cross-border trade settlements.

Yuan traded in Hong Kong to 6.6510 per dollar as of 12:10 pm local time, a discount rate of 6.6333 in Shanghai. offshore trading began in July and the Hong Kong rate has averaged 0.8 percent stronger than on the mainland. Hong Kong banks will be allowed to exploit the 20 billion yuan ($ 3 billion) of funds from the bank next month the city of yuan of compensation runs out of funds created pursuant to a quarterly fee.

The Hong Kong Monetary Authority made available 10 million yuan in October with a swap agreement with China's central bank after a quota of 8000 million yuan was insufficient. Chinese Premier Wen Jiabao, is allowing the currency to be more readily available outside the borders of China to reduce reliance on U.S. dollars in trade and finance.

"They're hurtling toward this point," said Gavin Parry, chief executive of Hong Kong Parry International Trading Ltd. "They are really in Hong Kong as the clearing and settlement center for storage and offshore transactions" in yuan, he said.

Hong Kong aspires to grow as havens for trade in yuan and HKMA Chief Executive Norman Chan said yesterday deposits amounted to 280 billion yuan by the end of November, up from 220 million yuan the previous month. The city received 130 million yuan in net trade payments of China in the first 11 months, told reporters in Hong Kong.

Currency Swap

The amount available in the yuan clearing bank will be subject to quarterly review, Chan said, predicting that 4 million yuan will be sufficient for the first quarter of 2011. The yuan fund, created through a currency swap agreement with the People's Bank of China will be "more than sufficient" to meet the growing demand for the currency, he said.

The HKMA, together with the city banks, will be the promotion of yuan business in Hong Kong offshore next year in countries that have "rapid increase in trade and investment flows to the continent," said Chan.

BOC Hong Kong is currently Hong Kong (Holdings) Ltd. as a clearing bank for RMB. There are risks in having a single bank for the release of yuan, the official Xinhua news agency reported on 10 December, citing Peter Wong, executive director of the Asia-Pacific of HSBC Holdings Plc.

the city's richest man, Li Ka-shing, plans for what may be the first initial share sale of yuan next year, in their search for more than 10 billion yuan (1.5 billion dollars ) for a real estate investment trust backed by the Beijing Oriental Plaza development, a person briefed on the matter, he said.