also Oct. 2011..Link ***Asian Currencies ~ China, ASEAN Move Closer on Yuan ~ Work underway on China-ASEAN yuan trade settlement agreement, central bank official ... and link .. Renminbi may replace dollar in Sino-African trade
and .. Link .. Links ~ CNH and China's Currency
Thursday January 19, 2012Hong Kong, The offshore renminbi market received a boost this week after the Hong Kong Monetary Authority eased rules on open yuan positions and risk limits, moves that analysts say will increase liquidity in the so-called "dimsum market".
The HKMA raised the limit on yuan open positions to 20 percent of their yuan balance sheet from 10 percent, and gave banks more flexibility to manage their risk.
The move will increase liquidity by giving banks more room to lend yuan and allows them to invest in more renminbi assets, Barclays analysts wrote in a note. "In addition, the increased NOP (net open position) limit should allow more latitude to position freely in the CNH market, which in general should favour long CNH positions," they added.
The increase in the open position limit has been long awaited as many banks had already reached their 10 percent limit in February 2011, forcing them to route their trades through other centres such as Singapore, which doesn't have any limits.
The HKMA also included Chinese government bonds and interbank bonds in the list of assets that banks can include to meet the 25 percent liquidity requirement, making it easier for them to manage risk.
Hong Kong and London also took some steps to work together in the offshore yuan market this week by setting up a private sector forum of officials from banks in both centres.
The forum will explore co-operation in clearing and settlement systems, market liquidity and development of new renminbi-denominated financial products.
To start with, the HKMA has extended operating hours of its offshore renminbi payments system by five hours, making it easier for renminbi transactions in London to be settled.
Related articles ... Link ..China urges exchange rate stability ~ more stable system of exchange rates and more currencies represented in the SDR or "Special Drawing Rights"
Link .. US Treasury Postpones Report on Chinese Yuan "Letting the Currency Rise would help the World Economy" says Geithner ...
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