The Cost Of RMB Short Selling Suddenly Increased.

The overnight interbank lending rate (Hibor), which was used as the benchmark interest rate for offshore renminbi lending, reached a record high on the same day. At that time, the market speculated that the Central Bank of China could take some intervention measures to combat speculative bets and followers by pumping liquidity.

The ability of Chinese policymakers to control financial markets and punish speculators in this way is the main reason for some short investors to hedge their foreign exchange risks with put options. Pershing Square Capital Management's Bill Ackman is one of them.

At the beginning of February, Helen Huang, a [-0.40%] analyst at HSBC Holdings, stressed that the Chinese government's fight against speculation had a negative impact on a financing channel for private enterprises.

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In the case of intensified intervention and government intervention, dim sum debt fell to a low level of four years in January.

The sharp rise in interbank interest rates did not mean a wider range.

The impact of interest rates on shore interest rates also seems to be constrained by the two markets' fragmentation.

But this does not mean that the intervention will not produce unforeseen negative effects.

She writes in the report that although liquidity levels are fluctuating and unpredictable, it may push up the cost of shorting the offshore renminbi and help stabilize the spot exchange rate of offshore renminbi, but this obviously does not help to attract the offshore renminbi to offshore depositors and investors.

The supply is declining, and dim sum bond issuers may find it difficult to issue new debt.