Overnight CNH HIBOR jumps, helps curb short selling pressure

CNH Hong Kong Inter-bank Offered Rate (HIBOR), which represents the borrowing cost of offshore Yuan in the interbank market, rose to 8.16167%, the highest in seven months.

Experts say the rise in HIBOR is a sign that PBOC wants to curb short selling (speculation) in order to keep Yuan stable ahead of its inclusion in the Special Drawing Rights (SDR) basket of International Monetary Fund (IMF) later this year.

Yuan has come under pressure on speculation the Fed would hike rates this year and is actually one of the weakest Asian currencies this year.

Note - The rise in Hibor increases short seller’s cost of borrowing the currency and thus curbs speculation activity.