Yuan deposits in Hong Kong dropped for the fourth straight month to the lowest level since June as expectations of currency appreciation weakened.
Savings denominated in the Chinese currency fell 2.1 percent from the previous month to 554.3 billion yuan ($88 billion) at the end of March, according to Hong Kong Monetary Authority Chief Executive Norman Chan, who made the comments in a statement on the authority’s website today.
Expectations of yuan appreciation have dwindled as Europe’s debt crisis sapped demand for Chinese exports. The yuan completed its first quarterly decline since December 2009 after Premier Wen Jiabao set the nation’s annual economic growth target at the lowest level in seven years.
The currency declined 0.07 percent to close at 6.3120 per dollar today in Shanghai, according to the China Foreign Exchange Trade System.
In Hong Kong’s offshore market, 12-month non-deliverable yuan forwards traded at 6.3490, a 0.6 percent discount to the onshore exchange rate, according to data compiled by Bloomberg. The average yield on Dim Sum bonds rose 10 basis points to 5.13 percent in April, according to a Bank of China Ltd. index.
Hong Kong’s banks handled 227 billion yuan of trade denominated in the currency in March, according to Chan. In the first quarter, the city’s lenders handled 571 billion yuan, and for all of 2011 the total was 1.91 billion yuan.
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