By Ronnie Harui
The People's Bank of China said Thursday that it will issue central bank bills in Hong Kong next week, a tool which is typically used to stabilize the yuan's exchange rate in the offshore market.
The bill issuance is aimed at improving the yield curve for renminbi bonds in Hong Kong, the PBOC said on a notice posted on the Hong Kong Monetary Authority's website, referring to the official name for the Chinese currency.
It announced the tender of 60 billion yuan ($8.18 billion) of six-month bills to be held on Jan. 15 for settlement on Jan. 17, adding that the sale serves to augment the range of renminbi financial products with high credit ratings in Hong Kong.
The planned issuance of a large amount of central bank bills in Hong Kong should drain offshore-yuan liquidity and discourage offshore-yuan short positions, said Goldman Sachs' Economics Research team.
The move by China's central bank comes as the currency faces renewed pressure ahead of the inauguration of U.S. President-elect Donald Trump, who has threatened to raise tariffs on imports from China.
The U.S. dollar rose against the onshore yuan to as high as 7.3318 on Wednesday, the highest intraday level since September 2023, according to FactSet.
The dollar was little changed at 7.3312 yuan in the onshore market in morning Asian trade Thursday, and was 0.1% lower at 7.3467 yuan in the offshore market.
The six-month bills will be made available on a coupon-bid basis by any qualified members of the Central Moneymarkets Unit through the HKMA, the notice said.
The bills will mature on the interest payment date falling on or nearest to 18 July 2025. The bills will bear interest at the uniform annual issue interest rate determined through the competitive tender, it added.
Write to Ronnie Harui at ronnie.harui@wsj.com
(END) Dow Jones Newswires
01-08-25 2314ET
