| An unprecedented surge in the cost of borrowing in yuan in Hong Kong adds to questions about the outlook for the city’s role as the biggest offshore hub for the Chinese currency. The overnight yuan Hong Kong Interbank Offered Rate climbed 53 percentage points to 66.82 percent on Tuesday -- a side-effect of a campaign by the People’s Bank of China to curb arbitrage between the offshore and onshore rates for the currency.
“A 66 percent rate is murderous for others being swept up in this who are not speculating,”said Michael Every, head of financial markets research at Rabobank Group. Central banks “usually win a round like this, but lose in the end,” he added...............................................Full Article: Source
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