Chinese yuan deposits in Hong Kong dipped 0.4pc in October from previous month

Total deposits of Chinese yuan in Hong Kong in October dropped 0.4 per cent month on month to 662 billion yuan, according to statistics published by the Hong Kong Monetary Authority (HKMA) on Wednesday.

The decline comes after yuan deposits posted a 1.9 per cent rebound in September, following a decline that lasted three consecutive months from June this year.

The most recent monthly decline may be attributable to the fact that investors are becoming more cautious on the currency’s prospects and adjust their asset allocations accordingly, said a spokesman for HKMA.

The sharp depreciation of the yuan against the US dollar over the past year has significantly dampened investors’ appetite for the currency. The yuan weakness accelerated after Donald Trump’s surprise win in the election for US president, an outcome that strengthened the greenback due to increased inflationary expectations in the US.

However, the Chinese currency started to show some signs of stabilisation earlier this week after an official from the Chinese central bank talked up the yuan last weekend and raised the prospect of possible intervention in the foreign exchange market earlier this week.

The yuan has weakened more 7 per cent since the same period last year and has declined by more than 4 per cent since China’s golden week holiday in October. On Wednesday evening, offshore yuan strengthened 0.2 per cent to 6.8994 per US dollar and onshore yuan was trading 0.13 per cent higher at 6.8821 per US dollar.