Yuan Squeeze Hits Hong Kong as Fragile Sentiment Spills to Foreign Exchange

(Bloomberg) — The cost to borrow the yuan in Hong Kong rose to the highest in almost two years, signaling its scarcity in the city — and reminding traders of a currency-strengthening tactic once employed by Beijing.

So-called overnight Hibor, a gauge measuring the cost for Hong Kong banks to borrow yuan from each other, climbed to a level unseen since April 2022 on Tuesday. One- and three-month tenors also climbed, to the highest since late last year.