Britain and other members of the Group of 20 leading economies are jostling for position as financial partners for China and have made positive noises about the inclusion of the yuan, which bankers say would be a turning point for trading of the currency.
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Chinese President Xi Jinping receives gift from British Academy of Film and Television Arts (BAFTA) as a symbol of commitment to strengthening ties between United Kingdom and China and BAFTA announces upcoming events planned in China in 2015/2016.
In the first half of 2015 alone, China’s capital outflows excluding foreign direct investment (FDI) reached $250 billion, almost 10 times the amount taken out of the country in the same period in 2014, according to calculations released by the U.S. Treasury this week.
Analysts said that investors had previously expected that the yuan would move higher against the USA dollar on a tight grip on the currency value by Chinese authorities so they had scrambled to raise their holdings in the yuan.
“Given there has been some uncertainty over macro China in the past few months and offshore issuance has been light, it’s great to see such a significant print”, he said, adding the bank stuck to its usual one-year tenor rather than issuing three-year maturity more common for dim sum bonds, which are sold outside China but denominated in yuan.
The ongoing debate over the valuation of China’s currency comes as lawmakers in the USA and 11 other countries prepare to review the recently-concluded Trans-Pacific Partnership (TPP) Agreement. Against a supply of bonds worth 600 million Yuan, investors proposed to acquire bonds worth 4.9 billion Yuan. The RMB became the fourth most-used world payment currency in August, overtaking the Japanese yen, statistics from the global transaction services organisation the Society for Worldwide Interbank Financial Telecommunication (SWIFT) showed.
Also yesterday, BOC launched its UnionPay Singapore dollar-RMB dual currency platinum debit card to celebrate SG50 and 25 years of diplomatic relations between Singapore and China. Final pricing of the London listed notes was settled at 3.1%.
By investor type, commercial banks took 47%, central banks and public sector funds 38% and institutional investors 15%.
The People’s Bank of China scaled back cash injections in its open-market operations for the second week in a row, choosing instead to top up the banking system with longer-term funds. Since June, when China’s stock market began to crash, such allocation has increased to more than 50 per cent.
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“There’s an apparent political will for China to keep the CNH bond market going”, said Pierre Trecourt, Asia Pacific Head of Credit Sales at Société Générale in Hong Kong, referring to the offshore yuan debt market.
