Hong Kong yuan deposit falls 4.6 per cent in October
Yuan deposit declined two months in a row
Yuan deposits in Hong Kong declined for the second month in a row in October as the devaluation of the currency prompted depositors to shift their yuan deposit from RMB to other currencies, a trend that bankers believe will continue in the weeks ahead.
The Hong Kong Monetary Authority said renmimbi deposits in Hong Kong stood at 854.3 billion yuan as at the end of October, down 4.6 per cent from the end of September.
This yuan deposits in the city has declined by 8.5 per cent to 895.4 billion yuan at the end of September, after People’s Bank of China on August 11 devalued the yuan by 2 per cent against the US dollar, with many believing the currency will continue to weaken again the greenback due to poor economic growth in the mainland.
Heng Koon-how, senior foreign currency strategist of Credit Suisse Private Banking and Wealth Management, expects the yuan deposit would continue to decline in the city.
“When depositors expect the yuan would continue to devalue against the US dollar and other currencies, it is natural for the depositors in Hong Kong and other parts of Asia to exchange their yaun into other currencies. They worry the interest rate they can earn from the deposit would not be sufficient to offset the devaluation impact,” Heng said.
Heng expects the offshore yuan would further weaken to 6.60 next year, down from about 6.49 on Monday which was a three month low.
The total remittance of renminbi for cross-border trade settlement amounted to 410.8 billion yuan in October, compared with 738.6 billion yuan in September.
Hong Kong-dollar deposits picked up by 0.6 per cent in October. By contrast, overall foreign-currency deposits including the yuan deposit decreased by 0.6 per cent during the month.