Daisy Wu
Tuesday, September 08, 2015
The Hong Kong Monetary Authority injected HK$3.1 billion into the market yesterday, as more people are believed to have converted yuan into the local currency.
It is the fifth intervention this month, with the total hitting HK$36.27 billion.
Standard Chartered Hong Kong said its survey, conducted after Beijing lowered the yuan's midpoint against the US dollar on August 11, showed that one in four locals have reduced their yuan asset holdings.
Of the 527 local residents who took part in the poll, over 60 percent expected the yuan to continue to weaken over the next 12 months.
Onshore yuan strengthened 0.15 percent and closed at 6.3657 yesterday, while offshore yuan declined as much as 0.38 percent yesterday and reached 6.4755 per US dollar last night.
Standard Chartered expects the yuan to weaken to about 6.50 at the end of this year.
"The slight drop from its spot price is a result of the stronger US dollar, caused by the coming interest rate hike, and people's current pessimistic opinion on China's economy," said Asia senior economist Kelvin Lau.
The SAR's yuan capital pool saw large outflows in August, following an exodus worth US$70 billion (HK$546 billion) in July.
"The current big spread between onshore and offshore yuan is led by a larger drop in the offshore exchange rate that better reflects market panic," said Lau, adding the huge spread exerts downward pressure on yuan capital in Hong Kong. But the bank expects the yuan to appreciate to 6.35 at the end of next year due to improved economic conditions.
"Higher interest rates on yuan deposits may be seen in Hong Kong than in the onshore market to draw back money to yuan deposits and products in the SAR," Lau added.
Deutsche Bank sees the yuan at 6.40 and 6.70 at the end of this year and next, respectively.
http://www.thestandard.com.hk/news_detail.asp?we_cat=2&art_id=160967&sid=45145018&con_type=1&d_str=20150908&fc=2
