Hong Kong overnight RMB rate drops

The cost for banks in Hong Kong to borrow yuan from one another overnight dropped to 14.05% on Monday, hitting the lowest level since Dec. 30. That overnight rate clocked in at 61.3% on Friday, the second-highest level on record. The moves reflect a broader effort by Chinese authorities to control the yuan’s descent. Last week, the yuan’s weakness threatened to take it near 7.0 to the dollar, a level that is closely watched by many analysts and that, if broken, could trigger a fresh push for Chinese individuals and companies to send money overseas, according to The Wall Street Journal. The moves to tighten liquidity in Hong Kong have worked, with the yuan more expensive offshore than onshore. Typically, when investors expect the yuan to decline, the yuan would be weaker in the freely traded offshore market.