The PBoC’s efforts to solve the ‘impossible trinity’

The People’s Bank of China has moved directly to control the offshore renminbi interest rate and foreign exchange rate (CNH) by issuing 20 billion yuan ($2.9 billion) of renminbi notes in Hong Kong. The sale of the notes through the Hong Kong Monetary Authority’s Central Moneymarkets Unit’s (CMU) bond tendering, clearing and settlement platform attracted significant interest from investors, particularly as the rate offered was viewed as higher than the PBoC necessarily needed to pay.