On June 21, the people's Bank of China (hereinafter referred to as "the central bank") successfully issued RMB 5billion six-month central bank bills in Hong Kong, China, with a bid winning interest rate of 2.30%. The offering was widely welcomed by overseas investors, with a total bidding amount of about 22.8 billion yuan, more than 4.5 times the issuance amount. The central bank said that this shows that RMB assets have a strong attraction to foreign investors, and also reflects the confidence of global investors in China's economy. According to the reporter of Securities Daily, since this year, the central bank has successfully issued six central bank bills totaling 60billion yuan in Hong Kong. Among them, the 3-month, 6-month and 1-year varieties were issued with 20billion yuan, 10billion yuan and 30billion yuan respectively. Wangyouxin, a senior researcher at the Bank of China Research Institute, said in an interview with the Securities Daily that the attraction of RMB assets to overseas investors is growing. On the one hand, it comes from the steady growth of China's economy and the high competitiveness of the manufacturing industry chain; On the other hand, it is due to the increasing opening of the financial market and the greater investment potential of the capital market. In addition, China's monetary policy and inflation trend have been stable for a long time, and the real rate of return has remained positive, making the investment in RMB assets have liquidity, rate of return and security. In the future, the investment attribute of RMB assets will be further strengthened. Decline of bid winning interest rate Since the beginning of this year, the central bank has issued 60billion yuan of central bank bills in Hong Kong, China, the same as that of the same period last year. Specifically, on February 21, the central bank issued two phases of RMB central bank bills in Hong Kong, including three-month central bank bills of 10billion yuan and one-year central bank bills of 15billion yuan. The bid winning interest rates were 2.50% and 2.70% respectively; On March 22, the central bank issued 5billion yuan of six-month central bank bills in Hong Kong, with a bid winning interest rate of 2.60%; On May 23, the central bank issued two phases of RMB central bank bills in Hong Kong, including three-month central bank bills of 10billion yuan and one-year central bank bills of 15billion yuan. The bid winning interest rates were 2.49% and 2.80% respectively; On June 21, the central bank issued 5billion yuan of six-month central bank bills in Hong Kong. It is noteworthy that the same is the 6-month RMB central bank bill. The bid winning interest rate was 2.60% when it was issued in March, while it was 2.30% when it was issued in June, which has dropped significantly. Especially at the time when the global bond market yield is rising, the decline in the bid winning interest rate of offshore RMB central bank bills is more noticeable. Wangyouxin believes that, on the one hand, this reflects that the RMB liquidity in the offshore market is relatively abundant and the financing cost is low; On the other hand, the total amount of bids and subscription multiples are high, and the issuance has been actively subscribed by overseas investors, pushing the interest rate down, reflecting that overseas investors are optimistic about the development potential of China's economy. Boost offshore RMB trend In the report on the implementation of China's monetary policy in the second quarter of 2020, the central bank pointed out that "the normal issuance of RMB central bank bills in Hong Kong not only enriches the series of high credit rated RMB investment products and RMB liquidity management tools in the Hong Kong market, but also helps to drive other issuers to issue RMB bonds in the offshore market and further promote the internationalization of the RMB." Wangyouxin said that the issuance of RMB central bank bills by the central bank in Hong Kong can enrich the RMB financial product investment system in the offshore market, meet the investment needs of overseas investors, improve the enthusiasm of holding RMB, and promote the development of RMB business in the offshore market in Hong Kong. At the same time, the issuance of bills by the central bank is also an important liquidity management tool and an offshore exchange rate stabilization tool, which is conducive to improving the bond yield curve in the offshore market. In case of large fluctuations or overshoot in the offshore exchange rate, the goal of stabilizing the exchange rate can be achieved by tightening the RMB liquidity in the offshore market and increasing the short selling cost of RMB. Therefore, it is expected that the issuance of central bank bills will help boost the trend of RMB in the offshore market in the short term. According to wind data, as of 17:00 on June 21, the offshore RMB exchange rate against the US dollar was reported at 6.69475, with the highest reported at 6.67215 and the lowest reported at 6.70165. It is worth mentioning that previously, in January 2021, BOC Hong Kong launched the RMB central note repurchase market making mechanism in Hong Kong. According to the data of the central bank, a total of 309billion yuan of central bank bill repurchase transactions were reached in 2021, and the range of participating institutions continued to expand. In the China policy implementation report for the first quarter of 2022, the central bank said, "the development of the Hong Kong Central Bank's bill issuance and central bill repurchase market has enriched the RMB investment product series and liquidity management tools in the Hong Kong market, and has played a positive role in promoting the healthy development of the offshore RMB money market and bond market, driving domestic and foreign market players to issue RMB bonds and carry out RMB business in the offshore market." (Xinhua News Agency)