China doubles RMB swap with Hong Kong

China doubled the value of its two-way currency swap with Hong Kong to RMB400 billion (US$62.92 billion), allowing more foreign banks access to the renminbi, The Wall Street Journal reported. The agreement allows the Hong Kong Monetary Authority (HKMA) to tap into a pool of yuan created by the People’s Bank of China (PBOC). The new deal will expire in three years, and will replace a previous agreement set to expire in January. Some analysts said the move is a publicity stunt, as foreign banks are unlikely to use the yuan pool because of the HKMA’s strict criteria and unattractive lending terms. Hong Kong had RMB622 billion (US$97.9 billion) in yuan-denominated deposits as of September 30, making it the largest offshore depository of renminbi. But growth in yuan-based, cross-border trade has slowed in Hong Kong over recent months, declining for the first time in the third quarter.