The amount of cross-border renminbi (RMB trade settlement grew rapidly in 2010, with the pool of offshore RMB funds in Hong Kong reaching a level to meet local demands, said Secretary for Financial Services and the Treasury of the city government KC Chan on Wednesday (Jan 12).
Last year, RMB trade settlement in Hong Kong grew from a monthly average of 4 billion RMB (0.61 billion USD) in the first six months, to 30 billion RMB per month from August to September, and then to 68 billion RMB in October, Chan said.
"There was good development of offshore RMB business in Hong Kong in 2010. RMB financing activities became more active, especially after the expansion of the RMB trade settlement scheme in June and the amendment to the RMB Clearing Agreement in July 2010," Chan said while addressing the city's legislative council meeting.
As cross-border trade settlement in RMB expands and deepens, RMB payments from the mainland to Hong Kong will continue to increase and funds so accumulated will become the major source of supply in the local RMB market, Chan said.
Data showed that for the first 11 months last year cross-border trade payment from the mainland to Hong Kong amounted to 180 billion RMB while payments from Hong Kong to the mainland topped 50 billion RMB.
Under such circumstances, RMB deposits in Hong Kong increased steadily to about 280 billion RMB at the end of November last year.
"The pool of offshore RMB funds in Hong Kong has reached a level that is adequate to meet the demand from local firms," Chan said.
Chan also noticed that the amount of RMB bonds issued last year exceeded 30 billion RMB, with issuers including local and multinational firms as well as international financial institutions such as the Asian Development Bank. (One US dollar is equivalent to 6.6 RMB)
