China opens interbank bond mkt, boosts yuan's overseas use

To further promote yuan cross-border trade settlement, China will allow overseas financial institutions to invest in the country's interbank bond market on a trial scheme, the People's Bank of China (PBOC) said on Tuesday.

 "It's a big boost for the offshore renminbi market," Bloomberg reported, citing Steve Wang, a credit strategist for Bank of China International Securities Ltd. in Hong Kong as saying.

According to Wang, the move would allow offshore holders of yuan to invest the money directly in China rather than going through middlemen.

"It's a step in the right direction that really opens the domestic securities market," Wang said.

These measures should help to internationalize the RMB, according to Tomo Kinoshita, an economist with Nomura in Hong Kong.

PBOC will start with clearing banks in Hong Kong and Macau, and overseas banks involved in yuan cross-border trade settlement and foreign central banks or monetary authorities that have signed currency swap agreements with China, according to a statement on its website posted on Tuesday.