China allows more overseas borrowing to help improve capital flows
Central bank sends verbal warning to defend weaker yuan
China39;s c.bank to boost FX reserves in Hong Kong

SHANGHAIHONG KONG, Jan 13 Reuters China announced more tools to support its weak currency on Monday, unveiling plans to park more dollars in Hong Kong to bolster the yuan and to improve capital flows by allowing companies to borrow more overseas.

A dominant dollar, sliding Chinese bond yields and the threat of higher trade barriers when Donald Trump begins his U.S. presidency next week have left the yuan wallowing around 16month lows, spurring the central bank into action.

The People39;s Bank of China PBOC has tried other means to arrest the sliding yuan since late last year, including warnings against speculative moves and efforts to shore up yields.

On Monday, authorities warned again against speculating against the yuan. The PBOC raised the limits for offshore borrowings by companies, ostensibly to allow more foreign exchange to flow in.

PBOC Governor Pan Gongsheng meanwhile told the Asia Financial Forum in Hong Kong that the central bank will substantially increase the proportion of China39;s foreign exchange reserves in Hong Kong, without providing details.

China39;s foreign reserves stood at around 3.2 trillion at the end of December. Not much is known about where the reserves are invested.

Today39;s comments from the PBOC indicate that currency stability remains an important priority…