Reports from Hong Kong that the PBOC has asked (commercial bank) Bank of China to increase the interest rate on its yuan lending to other banks
- Such a move would likely led to other banks raising their lending rate
- This bump higher in yuan borrowing costs would increase the cost of short selling yuan
- Which would be a discouragement to short selling of the yuan and temper capital outflow
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Note: Bank of China Hong Kong is the PBOC's offshore yuan clearing bank
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Oh, and on a sort of related matter. Not too long ago Adam asked me something about the BOC and Canadian interest rates.
Which initially puzzled me, I thought "What is the Bank of China doing with Canadian interest rates?" I figured it out in a few moments though.
True. (Unlike this.)
