[HONG KONG] Hong Kong's de facto central bank said Wednesday it will lift a daily cap for converting local currencies to Chinese yuan to facilitate a trading link between the city's bourse and Shanghai's stock exchange.
The southern Chinese city's exchange on Monday announced the launch of a delayed link-up with Shanghai to start November 17, which is expected to allow the equivalent of US$3.8 billion a day in cross-border transactions.
It was a move seen as a step towards greater financial liberalisation in the world's second largest economy.
Hong Kong's Monetary Authority chief Norman Chan told reporters Wednesday: "The Renminbi conversion limit for Hong Kong residents of 20,000 yuan (US$3,263) a day will no longer be available... effective on Monday." Currently, local residents can only convert Renminbi from Hong Kong dollars worth 20,000 yuan a day.
He said the new arrangement would make it more convenient for locals to buy shares listed in Shanghai and other financial products denominated in yuan.
"This will faciliate the launch of RMB investment products by financial institutions in Hong Kong and raise the position of Hong Kong as an offshore RMB business centre to new height," he said.
The Shanghai-Hong Kong platform will allow international investors to trade selected stocks on Shanghai's tightly restricted exchange and let mainland investors buy shares in Hong Kong.
The connection had been pencilled in to kick off last month but was unexpectedly cancelled. However claims it had been delayed because of pro-democracy protests in Hong Kong were denied by exchange president Chow Chung-kong.