Hong Kong has recently become the first place in the world to offer gold trading in yuan, the Chinese currency.
It is now the third-largest gold trading centre in the world, and the Chinese Gold & Silver Exchange Society (CGSE) has said that it will offer renminbi-dominated spot gold contracts to its Hong Kong investors.
Renminbi is the name of the official name of the currency of the People’s Republic of China, while the yuan is the unit of that currency.
The move comes as experts say that the Chinese government are pushing for a more international role for the yuan. The President of the CGSE says that the Renminbi Kilobar Gold is a “significant step” towards this goal.
Hong Kong is also making significant strides towards its goal with this move, as the city vies to become the most important yuan offshore trading hub.
In August, deposits of the Chinese currency into Hong Kong increased by 6.4%, to 609 billion yuan (£60bn).
HK Cements Its Place
China’s Vice Premier, Li Keqiang, has also made an announcement that will cement Hong Kong’s place as the top offshore hub for yuan trading. The announcement concerned corporate investment, as foreign companies will now be able to buy up to 20 billion yuan in Chinese stocks and bonds through Hong Kong.
The Hong Kong stock exchange became the first stock market outside of China to offer yuan-dominated shares.
This happened after Hui Xian, a real estate investment trust owned by Hong Kong industry giant Li Ka-shing, opted for its shares to be sold in the yuan over pounds or dollars.
The Chinese Gold & Silver Exchange’s president, Haywood Cheung, said that the move to offer gold trading in yuan will boost Hong Kong’s trading hub profile even further.
He also noted that until now, those investing with Chinese currency had been lacking alternatives in leveraged trading, which Hong Kong’s move is now fixing.