Hong Kong issues measures supporting liquidity in offshore RMB market

The move is said to be in response to tighter RMB liquidity conditions due to recent deposit withdrawals.

BBVA Research noted:

The Hong Kong Monetary Authority (HKMA) unveiled two new measures to support liquidity in the offshore RMB (CNH) market: (i) to establish a facility to provide banks with RMB liquidity through the HKMA’s existing RMB 400 billion swap line with the PBoC; (ii) to permit banks to include additional forms of liquid RMB assets in the calculation of the statutory liquidity ratio.

The move is in reaction to tighter RMB liquidity conditions due to recent deposit withdrawals. Over the longer term, these steps should facilitate Hong Kong’s role as a dominant offshore RMB center.