China Steps Up Yuan Defence
China stepped up its defense of the yuan, buying the currency in Hong Kong and sparking a record surge in the city’s money-market rates to deter bearish speculators. The People’s Bank of China repeatedly intervened in the offshore market on Tuesday, according to people familiar with the matter, following efforts to talk up the currency from two senior government officials on Monday. The yuan rose as much as 0.7 per cent versus the dollar in Hong Kong, briefly erasing its discount to the onshore rate for the first time since October. The cost to borrow yuan overnight in the city’s interbank market surged to 66.82 per cent, more than five times the previous high on Monday, as PBOC purchases reduced supply of the currency.