Yuan Hibor hits 8-month high as liquidity crunch continues
Speculation grows of intervention from the Chinese central bank to hit short sellers
Borrowing costs for the yuan in Hong Kong soared to an eight-month high on Monday as speculation grew of possible intervention from the Chinese central bank to hit short sellers of the currency.
The overnight Hong Kong Interbank Offered Rate (Hibor) for the offshore yuan surged by 1,573 basis points to 23.683 per cent, according to Treasury Markets Association data. That’s the highest level since January this year.
Meanwhile, the one-week rate rose 346 basis points to 12.446 per cent and the one-month rate was up by 164 basis points to 7.7193 per cent.
The yuan’s borrowing costs in Hong Kong have been on a rise since early September, signalling a shortage of liquidity in the offshore yuan market.
The overnight Shanghai Interbank Offered Rate (Shibor) rose by 1.4 basis point to 2.154 per cent on Monday, up for the tenth day in a row. The one-month Shibor also rose for the fourth consecutive day to 2.6950 per cent, the highest level so far this month. Three-month Shibor has risen for six days to 2.796 per cent.
Analysts also said the continued rise in offshore borrowing costs was a likely sign that the People’s Bank of China was planning to intervene in the market to discourage short sellers.
There has been widespread speculation in the (offshore) market that the PBOC has intervened in the market in an effort to raise borrowing costs for short-sellers