Hong Kong rush to deposit RMB is on

08:50, May 17, 2010      

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Investment-sensitive Hongkongers are rushing to banks in neighboring mainland cities to deposit yuan notes, fueled by expectations of an appreciation of the yuan and coming rate hikes, Wen Wei Po, a Hong Kong-based newspaper, reported Sunday.

Total value of the Hong Kong yuan deposits in banks in Shenzhen, South China's Guangdong Province have increased by about 15-20 percent compared with the previous year, according to the newspaper.

The exchange of the Hong Kong dollar into the yuan by Hong Kong residents also saw a 20 percent rise in total value as of the end of March, the newspaper reported, quoting currency exchange stores.

Hong Kong's yuan deposits, accounting for 2.7 percent of total non-Hong Kong dollar currency deposits, also grew 7.1 percent from a month earlier to 70.8 billion yuan ($10.37) at the end of March, compared with the 3.3 percent growth rate seen in February, according to the Hong Kong Monetary Authority (HKMA).

Non-Hong Kong dollar currency deposits on the whole declined 0.2 percent at the end of March, the HKMA said.

Bets on the yuan in Hong Kong reflected the market's general expectations of a resumption of yuan appreciation.

Funds outstanding for foreign exchange, a key index for measuring foreign capital inflow from overseas, are expected to have increased over 370 billion yuan ($54.19 billion) in April, much higher than in previous months, according to the latest reports. The central bank has not yet released the figures for April.

The net increase of funds outstanding for foreign exchange reached 298.17 billion yuan ($43.67 billion) in January, 179.50 billion ($26.29 billion) in February and 270.15 billion yuan ($39.57 billion) in March, according to the central bank.

Interest rate hikes are also expected to happen this year on concerns over inflation.

The consumer price index hit an 18-month high of 2.8 percent in April, drawing close to the 3 percent warning limit. The producer price index grew 6.8 percent in April, the highest in 19 months, the National Bureau of Statistics reported Tuesday.

However, the uncertainties seen in global economic recovery recently have made some analysts believe the government will be wary of making policy changes.

Source: Global Times


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