(Yicai Global) Sept. 20 -- Yesterday, the first trading day after the Mid-Autumn Festival, the overnight Hong Kong Interbank Offered Rate (Hibor) rose 1,573 base points, nearly doubling, to 24 percent. This may indicate a move by the People's Bank of China (PBOC) to increase the cost of short-selling CNY, thus easing the pressure for CNY devaluation.
The data marks the second-highest zenith since March 2010, second only to the 67 percent logged on January 12 of this year. Seven-day Hibor was also up at 12.5 percent.
China's central bank will try to maintain the stability of the CNY exchange rate in the run up to the CNY's official entry into the Special Drawing Rights (SDR) basket on October 1. Commerzbank believes that the Central Bank's strategy of maintaining a stable CNY interest rate in the short term could undermine market confidence. Also, frequent intervention will lead to the belief that CNY devaluation is inevitable, thus worsening capital outflow.
The Hibor upsurge is attended by a rising CNY and CNH exchange rate, both of which were up last week. The CNH exchange rate went from 6.6917 to 6.6484, an increase of 109 base points yesterday, with fluctuations in the middle price. The CNH (offshore yuan) exchange rate closed at 6.6685. CNY closed at CNY6.6688 yesterday, not only wiping out more than 200 points, but also sparking a price inversion.