AsianFin -- China unveiled additional measures on Monday to support its weakening currency, including plans to increase dollar reserves in Hong Kong and improve capital flows by allowing companies to expand their overseas borrowing.
The yuan has faced significant pressure, hovering near 16-month lows amid a strong U.S. dollar, declining Chinese bond yields, and looming concerns about heightened trade barriers as Donald Trump prepares to assume the U.S. presidency. These challenges have prompted action from the People's Bank of China (PBOC).
Since late last year, the central bank has implemented various measures to stabilize the yuan, such as issuing warnings against speculative trading and working to boost bond yields. On Monday, the PBOC reiterated its stance against speculation, signaling a commitment to maintaining currency stability.
To encourage capital inflows, the PBOC raised limits on offshore borrowing for companies, enabling more foreign exchange to enter the market.
PBOC Governor Pan Gongsheng, speaking at the Asia Financial Forum in Hong Kong, announced plans to significantly increase the proportion of China's foreign exchange reserves held in Hong Kong. However, specific details about the scale or timing of this adjustment were not disclosed.
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