<p>What the paragraph actually said is </p>

<blockquote>
  <p>"Fervent demand for renminbi from international investors has driven down rates in Hong Kong and thereby created incentives for companies considering using the renminbi for trade or financing," <a href="http://www.ft.com/intl/cms/s/0/7a4e3f26-1ce2-11e0-8c86-00144feab49a.html#axzz4ItO112gQ" rel="nofollow">explains Financial Times correspondent Robert Cookson</a>.</p>
</blockquote>

<p>This means that international investors were buying offshore Renminbi (CNH) in Hong Kong and using that to buy offshore bonds denominated in Renminbi. That pushed the price of those bonds up, corresponding to reduction in their effective interest rates ("driving down rates").</p>

CC BY-SA 3.0
2016-08-31T07:28:05.320Z
2016-08-31T07:28:05.320Z
Henry
<p>I read something similar to here, <a href="http://www.businessinsider.com/onshore-and-offshore-renminbi-2014-2?IR=T" rel="nofollow">http://www.businessinsider.com/onshore-and-offshore-renminbi-2014-2?IR=T</a>, paragraph 6, that demand for renminbi drives down cny bond market?</p>

<p>I can understand how demand for bonds can drive the currency markets (because to buy local denominated bonds mean you have to purchase the currency) but I cannot understand how demand for the currency can drive the bond markets and to what extent this happens.</p>

<macroeconomics><finance><exchange-rates><bonds><china>
Renminbi demand and CNY rates
Trajan
# Renminbi demand and CNY rates

(Asked by: username_0 on 2016-08-30)

I read something similar to here, <http://www.businessinsider.com/onshore-and-offshore-renminbi-2014-2?IR=T>, paragraph 6, that demand for renminbi drives down cny bond market?

I can understand how demand for bonds can drive the currency markets (because to buy local denominated bonds mean you have to purchase the currency) but I cannot understand how demand for the currency can drive the bond markets and to what extent this happens.

**Tags:** macroeconomics, finance, exchange-rates, bonds, china

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## 1 answers

### Answer by username_1 on 2016-08-31. Score: 1 | Accepted answer

What the paragraph actually said is

> "Fervent demand for renminbi from international investors has driven down rates in Hong Kong and thereby created incentives for companies considering using the renminbi for trade or financing," [explains Financial Times correspondent Robert Cookson](http://www.ft.com/intl/cms/s/0/7a4e3f26-1ce2-11e0-8c86-00144feab49a.html#axzz4ItO112gQ).

This means that international investors were buying offshore Renminbi (CNH) in Hong Kong and using that to buy offshore bonds denominated in Renminbi. That pushed the price of those bonds up, corresponding to reduction in their effective interest rates ("driving down rates").


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