Hong Kong removes caps on renminbi conversion Hong Kong has scrapped restrictions on how much renminbi local residents are permitted to buy in a single day, in a move aimed at boosting liquidity ahead of a new cross-border equity trading scheme. For the last few years, Hong Kong residents have only been allowed to convert up to Rmb$20,000 (US$3,265) a day into or out of the Chinese currency. However, as of Monday, those restrictions will disappear. The largely symbolic move is designed to make it easier for people to switch in and out of renminbi as and when they want, and will coincide with the launch of the Shanghai-Hong Kong Stock Connect - an equity market trading link between the two bourses. Norman Chan, head of the Hong Kong Monetary Authority, said the changes would help "raise the position" of the territory as a renminbi business centre. "I believe that after the removal of the conversion limits it will be more convenient for Hong Kong residents to participate in the Shanghai-Hong Kong stock connect and other renminbi financial transactions," said Mr Chan. Paul Mackel, FX strategist at HSBC, described the HKMA's move as an "important step in the right direction" to help deepen the Hong Kong renminbi market, but added the end of conversion limits came as little surprise. The HKMA removed the conversion caps for non-residents in 2012. The landmark stock trading scheme also goes live on November 17, and will allow global investors - including Hong Kong's army of retail investors - far freer access to Shanghai-listed shares. Offshore investors wishing to buy Chinese shares through the stock connect must use renminbi to make trades. Removing the conversion cap means local investors no longer need to accumulate cash in the Chinese currency ahead of time. However, China's daily limit on how much renminbi can be repatriated into the country - set at Rmb80,000 - will remain in place. In anticipation of the stock connect launch, Hong Kong banks have been battling to lure renminbi deposits by offering higher interest rates. The end of restrictions should also help boost the market for renminbi-denominated securities listed in Hong Kong - something both the stock exchange and the government have been keen to promote. ANZ analysts said they expected to see a "richer product suite" of renminbi investments targeting Hong Kong residents as a result of the changes. The territory is poised for its first dual-currency initial public offering when Hong Kong Airlines sells shares in both Hong Kong dollars and renminbi. Turnover in offshore renminbi - also known by its trading code CNH - has risen rapidly in the past couple of years to reach around $30bn a day. That figure is expected to rise further once the stock connect is up and running. Hong Kong remains by far the biggest centre for trading and investing in offshore renminbi, with Rmb945bn held in deposits as of September. It has also been the test zone for renminbi-related reforms, such as the launch of an offshore bond market in 2007 and renminbi-denominated investment licences in 2012. Both those innovations have since spread to other financial centres including London and Singapore.