Outstanding renminbi loans in the Hong Kong market reached 724 billion yuan ($99.32 billion) by the end of 2024, marking a 64 percent surge from 2023, the Hong Kong Monetary Authority said, reflecting the steady development of Hong Kong's offshore renminbi market.
Eddie Yue, CEO of the HKMA, said that Hong Kong's offshore renminbi market has continuously developed over the past two decades despite renminbi exchange rate fluctuations, with financing activities thriving when renminbi interest rates were low while investment appetite grew when interest rates were elevated.
"It (the development of Hong Kong's offshore renminbi market) depends more on real economy dynamics," Yue said in a recent interview in Beijing.
"Whether the yuan appreciates, stays generally stable or depreciates, diverse market demands will continue to drive the market's expansion."
"In international trade, an increasing number of trading partners have started to use the renminbi for settlements. They may need renminbi loans for imports and opt for renminbi investments after receiving renminbi payments in exports," he said.
Regarding what impact the new tariffs imposed by the United States on Chinese goods will bring on the renminbi exchange rate, Yue said that it may depend on multiple factors such as the competitiveness of Chinese exports and the structure of export destinations, and the currency's value may not be determined by policy changes in a single market.
Yue said the HKMA is actively communicating with relevant parties to enrich Hong Kong's offshore renminbi liquidity pool, adding that Hong Kong boasts a mature hedging mechanism, providing offshore renminbi investors with a wide range of risk management tools.
