The daily RMB20,000 cap on conversion limits for Hong Kong residents will no longer apply from November 17.
Monetary Authority Chief Executive Norman Chan told the media today that under the new arrangements, banks will square the positions arising from RMB conversion conducted with Hong Kong residents in offshore markets instead of onshore markets.
As a result, the prevailing conversion and other restrictions for onshore conversion will no longer be applicable.
He said he hopes the removal of the conversion limits will bring more convenience for local residents to participate in the Shanghai-Hong Kong Stock Connect and other RMB financial transactions. Residents can buy or sell RMB more freely.
He believes Hong Kong's liquidity pool, at 1.1 trillion yuan, is large enough to cater for residents’ additional needs for RMB conversion transactions.
The new arrangement will also facilitate the launch of RMB investment products by financial institutions in Hong Kong and raise its position as an offshore RMB business centre, he added.
The authority has issued a circular to banks setting out the detailed arrangements.
