PBOC to Issue Renminbi Central Bank Bills in Hong Kong Towards End of June

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The People’s Bank of China (PBOC) has announced that it will launch another round of yuan-denominated central bank bills via Hong Kong towards the end of June, as part of efforts to improve the Hong Kong renminbi-bond yield curve.

PBOC made the announcement via its official website on 11 June.

PBOC previously issued two tranches of renminbi central bank bills on 15 May, including 10 billion yuan in 3-month instruments and 10 billion yuan in 1 year instruments with bid rates of 3.00% and 3.10% respectively.

The May issuance marked the third time that PBOC used Hong Kong’s Central Moneymarkets Unit (CMU) to issue renminbi central bank bills after prior issuances in November 2018 and February 2019.

PBOC previously said that the moves would both serve to provide the Hong Kong market with a greater range of high-grade renminbi investment products and liquidity management tools to satisfy demand, as well as serve to improve the Hong Kong renminbi yield curve, helping to drive internationalisation of the renminbi.

Guo Tianyong (郭田勇), chair of the China Banking Sector Research Center of the Central University of Finance and Economics in Beijing, said that the issuance of renminbi central bank bills in Hong Kong served to withdraw offshore liquidity and push rates higher, stymieing shorts-sellers, reducing pressure to abandon the renminbi, and helping to stabilise exchange rates.

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