SHANGHAISINGAPORE, Aug 24 Reuters Increased yuan bill sales by China39;s central bank in Hong Kong this week helped tighten liquidity in the offshore market to help stabilise the yuan by making it expensive for speculators to short the currency, according to a former central banker.

The comments by Sheng Songcheng, a former director of the People39;s Bank of China39;s PBOC statistics and analysis department, were reported by the stateowned Shanghai Securities News on Thursday.

Sheng made the observation after the PBOC sold 35 billion yuan 4.81 billion worth of bills in Hong Kong on Tuesday, exceeding the 25 billion yuan of the bills coming due this month.

The PBOC usually conducted a flat rollover by auctioning the same amount of bills as those maturing, and selling a higher amount would reduce yuan liquidity in the market.

Higher offshore yuan bill sales in Hong Kong could be related to recent yuan situations, Sheng was quoted as saying, as it would help stabilise foreign exchange market expectations

and is considered to be a policy management tool.

The yuan exchange rate will not depreciate unilaterally, but will maintain twoway fluctuations, he said.

Sheng added that if downside pressure on the offshore yuan persists, the PBOC could continue to issue more offshore yuan bills.

Sources told Reuters that China39;s major stateowned banks were seen actively mopping up the offshore yuan earlier this week, as the currency was coming under growing depreciation…