Spike in offshore yuan seen to be short-lived

Hong Kong

A SPIKE in the offshore yuan following suspected rare intervention by Chinese state banks is expected to be short-lived, especially with a looming US interest rate rise likely to add to the attraction of owning dollars.

But those betting on a further depreciation in the yuan are likely to have only limited room to push the offshore rate down relative to the onshore rate without drawing the ire of the Chinese central bank and the risk of further state intervention, market sources said.

"The central bank will not stand aside if depreciation expectation is formed again and more intervention may happen," said a Hong Kong-based currency trader, who declined to be identifi…