Hong Kong: The rate at which banks charge each other to borrow yuan in Hong Kong surged to a record Tuesday with speculation China's central bank was buying huge amounts of the unit to fend off speculators.
The overnight Hong Kong Interbank Offered Rate (HIBOR) for the offshore yuan jumped 53 percentage points to almost 67 percent owing to tight liquidity. The one-week rate also surged, to 33.8 percent from 11.2 percent.
The surge comes as traders around the world grow increasingly worried about the state of China's economy, a key driver of global growth, as it suffers a painful growth slowdown that has sent markets into turmoil.
Beijing's decision last week to lower the value of the yuan against the dollar to a five-year low added to concerns, with the leadership's handling of the crisis being called into question.
This in turn has caused heavy selling of the Chinese unit, leading the People's Bank of China to step in to buy it and sell dollar, tightening liquidity.
AFP
