LONDON (dpa-AFX) - The Hong Kong Monetary Authority (HKMA) on Tuesday decided to raise the limit on yuan net open position to 20 percent from 10 percent, according to a statement from the central bank. This adjustment was made after taking into account the authorized institutions' enhanced risk management practices on yuan business and the development of the offshore yuan market in Hong Kong, HKMA said. Under the new requirement, all authorized institutions should restrict their yuan net open position, whether net long or net short, to 20 percent of the size of their respective yuan balance sheet. Meanwhile on Monday, British chancellor George Osborne and Hong Kong Monetary Authority Chief Executive Norman Chan announced the launch of a joint private-sector forum to promote the global use of yuan. The forum, to be facilitated by HM Treasury and the HKMA, will enhance cooperation between the UK and Hong Kong to support the Chinese Government's policy in the development of the offshore yuan market. 'London and Hong Kong are uniquely placed to assist in the development of this exciting market and, further to last summer's agreement, I am delighted that the financial services industries in both financial centers are working together to achieve this goal,' Osborne said in a statement during his visit to Hong Kong. The British government's aim is for London to complement Hong Kong in becoming a major offshore yuan center, the HM Treasury said. Yuan deposits in Hong Kong have increased from 64 billion in January 2010 to 627 billion in November 2011 and the volume of RMB denominated bonds have increased to from zero to $31.5 billion in just four years. The UK already handles almost 30 percent of all RMB foreign exchange trading and is home to tens of billions of RMB deposits.
Copyright RTT News/dpa-AFX