Bank of England, PBOC raise value of sterling/renminbi swap to 350 billion

Just because China is burning through its reported foreign-exchange reserves more slowly doesn’t mean it’s losing its commitment to support the yuan.

The SDR basket determines its value based on four major currencies, which are now the United States dollar, the euro, the Japanese yen, and the pound sterling.

The upcoming review of the Chinese currency’s inclusion in the IMF’s Special Drawing Rights basket in November is an important step in this direction.

HSBC is one of the banks coordinating the deal for the PBOC, along with the Industrial and Commercial Bank of China (ICBC).

London yuan deposits stood at 20 billion yuan ($3.15 billion) at the end of 2014, down from the mid-year’s 25.4 billion yuan level, but higher than 14.6 billion yuan at the end of 2013, according to City of London data.

Sustained intervention by China’s central bank and policy changes are prompting traders to change their views and raise year-end targets for the yuan, after its surprise devaluation in August sparked fears the Beijing wanted a sharp fall.

Bankers and economists at events this week in London, the biggest hub for yuan trading outside Asia, said there were still problems with the depth of liquidity of yuan markets, chiefly relating to the lack of an easily accessible market in Chinese government bonds.

While the declaration focused more on political and economic collaboration, Xi is bringing more cultural flavor and personal bonds to the ties during the visit.

Britain launched its offshore yuan market in London in 2011 and became the first developed country to sign a currency swap deal with China in 2013.

A plan for Huawei and the University of Surrey to cooperate on a 5G innovation center “sets an example for the US, with a more open attitude toward cooperation with China”, said an opinion piece in the Global Times.

Talking about the long-term growth engines for China, Flint believes urbanization is driving the growth a lot and would be one of underpinnings to the growth in China, along with the services sector and the consumer demand. More ominous was a drumbeat of criticism from Washington, where there are grave worries that Britain’s kowtow is separating it from America and undermining Western resolve to stand up to China in regions like the South China Sea, and on questions of human rights.

“The blueprint is to recognize that the Pearl River Delta is an economic regional significant importance”.

But for one Shanghai newspaper the trade deals came second: the Oriental Morning Post headlined the announcement of a “relaxation of visas for Chinese tourists” – while the Shanghai Morning Post highlighted the “beautiful women and jewelry” on display at the state banquet at Buckingham Palace. “The power of the Delta is not only expanding in trading and logistic but also is becoming the Silicon Valley in many ways in terms of how the social media, the internet companies, and high-tech companies are located in this part of the country”. And if the coupon prints aren’t likely to be competitive versus what can be achieved in the offshore U.S. dollar markets, then potential Panda issuers will take the latter route. At the same time, foreign investors jittery about China’s slowing growth are selling their offshore holdings at a record pace, pushing yields, which move inversely to prices, higher.