Hong Kong Monetary Authority Chief Executive Norman Chan said Wednesday he expects the sale of yuan assets amid currency depreciation to be a short-lived phenomenon.
Offshore yuan deposits in Hong Kong, the biggest offshore yuan hub, likely shrank last month following Beijing’s move to devalue the currency on Aug. 11, the chief of Hong Kong’s de facto central bank said on the sidelines of a conference.
The HKMA is scheduled to issue data on offshore yuan deposits in Hong Kong at the end of this month, and Mr. Chan said the recent robust demand for the Hong Kong dollar is the result of local residents unwinding their yuan deposits and investments and converting the funds into the local unit or other currencies.
So far this month, continuous money inflows have driven the Hong Kong dollar to the strong side of its trading band against the U.S. dollar, triggering intervention by the HKMA.
Given China’s stable economy and large current account surplus, “I don’t see conditions for the renminbi to depreciate over the long term,” Mr. Chan said, using the official name for the Chinese currency, Demand for yuan assets in Hong Kong will likely increase once the value of the currency stabilizes, he said.
original source: http://www.wsj.com/articles/flight-from-chinas-yuan-likely-temporary-hkma-chief-says-1442373660