Thursday, May 08, 2008

BOC widens HK dollar-yuan spread more than seven times

Bank of China, Hong Kong's only yuan clearing bank, raised transaction costs for conversions between the Hong Kong dollar and the yuan by more than seven times, Bloomberg reported. The spread between the cost of buying and selling Hong Kong dollars for the yuan was widened to 0.75 percentage points from 0.10 percentage points on May 5. An analyst said the measure was implemented to reflect official concern over hot money inflows and speculative demand for the yuan. The Hong Kong dollar is pegged at HK$7.8 to the US dollar, while the yuan has risen some 19% against the Hong Kong dollar since July 2005.

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