The People's Bank of China will issue Rmb20bn ($2.9bn) in central bank bills in Hong Kong's offshore renminbi market, part of China's efforts to support the offshore renminbi bond market by providing an interest-rate benchmark.
The issuance will also serve to support the renminbi exchange rate by soaking up offshore renminbi (CNH) liquidity, raising the borrowing costs for investors who want to borrow CNH in order to bet on renminbi depreciation. The renminbi has this week been trading at its lowest level against the dollar in 10 years.
The PBoC and the Hong Kong Monetary Authority in late September announced the plan for PBoC to sell bills, but the announcement on Wednesday provides detail on the timing, size and tenor of the deal. The PBoC will issue Rmb10bn in 91-day bills and an additional Rmb10bn in one-year bills, both on November 7.