Source: China State Council Information Office
The People’s Bank of China (PBOC), the country’s central bank, said on Wednesday it has extended a currency swap agreement with the Hong Kong Monetary Authority and expanded the scale of the deal.
The size of the swap line has been expanded to 500 billion yuan (76 billion U.S. dollars) or 590 billion Hong Kong dollars, up from 400 billion yuan or 470 billion Hong Kong dollars, according to a PBOC statement. The pact is valid for five years and can be extended upon mutual consent.
The two parties believe the extension will help maintain regional financial stability, support trade and investment between the mainland and Hong Kong, and develop Hong Kong’s offshore yuan market, the PBOC said.
Such a currency swap deal allows the exchange of payments in one currency for equivalent amounts in the other to facilitate bilateral trade settlements and provide liquidity support to financial markets.