The Chinese central bank announced today (July 4) that it has upgraded its currency exchange system with Hong Kong to a permanent arrangement, increasing it from 500 billion yuan to 800 billion yuan ($119.40 billion).
The agreement was signed by the People’s Bank of China (PBOC) and the Hong Kong Monetary Authority to become the PBOC’s first original exchange agreement.
The PBOC said the updated deal could provide long-term liquidity support to the Hong Kong market. This will help stabilize market expectations and promote the development of Hong Kong’s offshore yuan market.
“This year marks the 25th anniversary of Hong Kong’s return to the motherland. The signing of the agreement will help consolidate Hong Kong’s status as a global financial centre and promote the long-term and prosperous development of Hong Kong’s financial industry,”according to the PBOC.
Chinese President Xi Jinping said on Thursday during a rare visit to the global financial center that the city had overcome challenges and “risen from the ashes”.
Xi also said China would support Hong Kong’s role as a center of international finance and trade.
The regulators of mainland China and Hong Kong will create a new program to provide mutual access between the Hong Kong and mainland interest rate exchange markets.