Bank of China Raises Fees for Hong Kong Dollar Trades Sevenfold

Bank of China Ltd., the only yuan clearing bank in Hong Kong, said it raised transaction costs for conversions between the Hong Kong dollar and the yuan more than sevenfold.

Bank of China widened the spread between the cost of buying and selling Hong Kong dollars for the Chinese currency to 0.75 percentage points from 0.10 points on May 5, said Clarina Man, spokeswoman at Bank of China's Hong Kong branch.

China Foreign Exchange Trading System, the country's trading platform, increased foreign-exchange transaction fees with the Hong Kong branch of Bank of China on the same day, according to Man. She wouldn't disclose the amount of increase.

Most Hong Kong lenders said they would pass on the additional cost of converting currencies to customers, Singtao Daily reported today. Residents of the city are transferring their Hong Kong dollar deposits into the Chinese yuan to benefit from higher interest and currency appreciation, the newspaper said.

Yuan Heads for a Sixth Weekly Gain as China Curbs Inflation

Jan. 18 (Bloomberg) -- The yuan headed for a sixth weekly gain, the longest stretch in seven months, on speculation China is allowing the currency to appreciate to cool the economic expansion and bring inflation down from an 11-year high.

The currency's advance so far this year is the best since China abandoned a link to the dollar in July 2005. The nation has increased interest rates and told banks to set aside more funds as reserves to slow growth that is the fastest of any major economy by reducing the cash available for investment.

``The yuan will remain one of their key tools to fight inflation,'' said Sean Callow, a foreign-exchange strategist at Westpac Banking Corp. in Singapore. ``There will be bursts of strength then periods of slower gains.''

The yuan rose 0.18 percent to 7.2488 against the dollar this week as of 12:22 p.m. in Shanghai, the longest run of weekly gains since June 1. Westpac forecasts the currency will strengthen to 6.98 by year-end.

``While the yuan is treading water short term, I think we will see reacceleration over the next one-two months, unless there is a sharp, unexpected slowdown in China's economy, which virtually no one expects,'' Callow said.

`Some Progress'

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Yuan Heads for Fifth Weekly Gain as China Seeks to Cool Economy

Jan. 11 (Bloomberg) -- The yuan headed for a fifth weekly gain, the longest winning streak since September, on speculation China is seeking faster gains to cool the economy.

The currency also rose as the state-run Xinhua News Agency reported today that the nation's trade surplus surged to a record for 2007, adding to pressure for yuan gains. The World Bank this week forecast China will grow more than 10 percent this year and next, which may fuel inflation already at the fastest in more than a decade.

``The pace of appreciation has been increasing and we're seeing the market raise its expectations over the pace of gains,'' said Thio Chin Loo, a senior currency analyst at BNP Paribas in Singapore. ``They're using a tighter policy to cool things down, and stepping on the brakes some more.''

The yuan gained 0.1 percent to 7.2644 versus the dollar as of 12:46 p.m. in Shanghai, compared with 7.2719 yesterday, according to ....
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Yuan Heads for Weekly Advance as China Signals Further Gains

Expert Advisor

Dec. 14 (Bloomberg) -- The yuan headed for its biggest weekly advance in more than a month as Chinese officials signaled they're willing to allow faster appreciation to cool economic growth.

U.S. Treasury Secretary Henry Paulson said this week during his fifth visit to China that the Asian nation ``recognizes'' the need for greater currency flexibility. Central bank Governor Zhou Xiaochuan said China will use exchange-rate policy to prevent overheating after reports showed inflation at an 11-year high, a widening trade surplus and rising retail sales.

``China is accelerating the pace of currency gains for their own reasons and it's encouraging,'' said Patrick Bennett, a foreign-exchange strategist at Societe Generale SA in Hong Kong. ``The currency needs to take more of a tightening role.''

The yuan rose 0.43 percent this week to 7.3715 per dollar as of the 5:30 p.m. close in Shanghai, compared with 7.3692 yesterday and 7.4030 a week ago, according to the China Foreign Exchange Trade System. The currency touched 7.3640 yesterday, the strongest since a link to the dollar was scrapped in July 2005.

Stocks in Hong Kong and China fell for a third day on speculation the People's Bank of China will boost interest rates. The central bank increased its lending and deposit rates five times this year and raised the amount of cash banks must set aside 10 times.

`A Drastic Measure'

``A rate hike would be a drastic measure but it's quite reasonable for them to increase again,'' said Carlos Cheung, chief currency dealer at Bank of East Asia Ltd. in Hong Kong. ``I would not be surprised if they hiked today.''

China's consumer prices increased 6.9 percent in November, the statistics bureau said Dec. 11, while the trade surplus rose 15 percent to $26.3 billion, the third-highest monthly total, the custom's bureau said the same day. Gross domestic product expanded 11.5 percent in the third quarter, the fastest pace of the world's 20 biggest economies.

Read more:Yuan Heads for Weekly Advance as China Signals Further Gains