Daily renminbi foreign exchange transaction volumes at Bank of China (Hong Kong) Ltd. remained strong in August, rising to 80 billion yuan (US$12.6 billion) at one point, despite a declining trend in the market, the Hong Kong Economic Journal reported on Thursday, citing Yang Jiewen (楊杰文), head of the bank’s renminbi business division.
Yuan deposits for the month grew as the exchange rate of the currency stabilized while corporate demand also increased, Yang said.
Foreign central banks also showed strong interest in the renminbi.
Individual demand for the currency, however, declined at a single-digit rate, partly due to a switch in currency for investment through the Shanghai-Hong Kong Stock Connect.
Fund flows to Shanghai reached HK$19 billion net in August after the People’s Bank of China revised the daily fixing mechanism for the renminbi, resulting in a devaluation of the currency.
Yang expects the difference between the currency’s onshore and offshore exchange rates to further narrow, from the recent level of about 500 basis points.
E Zhihuan (鄂志寰), the bank’s head of economic analysis and research, has forecast that the renminbi will mildly depreciate against the US dollar as the world’s largest economy is likely to raise its fed fund rate soon.
The Chinese currency is expected to stand at about 6.45 to the dollar at the end of this year and 6.6 at the end of next year.
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