Yuan money markets are expanding in Hong Kong as more banks quote interbank interest rates for the currency, helping widen its use for trade and investment beyond China's borders.
JPMorgan Chase & Co., ICBC (Asia) Ltd., Bank of Communications (Hong Kong) Ltd., Bank of East Asia Ltd. and Bank of Tokyo-Mitsubishi UFJ Ltd. started providing interbank rates for yuan in Hong Kong today, according to Jack Cheung, chief executive officer of the city's Treasury Markets Association. That brings to eight the number of lenders quoting prices. Bank of Tokyo-Mitsubishi and Citigroup Inc. completed the first yuan interest-rate swap involving the Hong Kong interbank rate.
"It's a breakthrough," said Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB. "In order for the market to fully develop, you do need a swap curve. This will allow more financial instruments like hedging for Dim Sum bonds and benchmarks for loans to develop in the offshore yuan market."
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