HONG KONG - The People's Bank of China (PBOC) and the Hong Kong Monetary Authority (HKMA) signed a renewed RMB/HK dollar currency swap agreement on Tuesday, with its size expanded to 400 billion yuan/HK$490 billion, the Hong Kong Special Administrative Region (HKSAR) government said.

This new agreement for a term of another three years superseded the 200 billion yuan/HK$227 billion currency swap agreement signed in 2009.

When signing the new agreement, HKMA Chief Executive Norman Chan said, "With the strong support from the Central Government and the Mainland authorities, the development of Renminbi business in Hong Kong has made very encouraging progress over the past year."

"The renewal and expansion of the currency swap agreement between the HKMA and the PBOC is crucial in helping us to provide liquidity, when necessary, to maintain the stability of the offshore Renminbi market in Hong Kong."

Financial Secretary of the HKSAR government John C Tsang said, "The renewal of the currency swap agreement and the expansion of its size will allow more flexibility for the development of Renminbi business in Hong Kong. It is also conducive to the strengthening of Hong Kong's status as an offshore Renminbi business center."

According to the city's Information Services Department, during the first three quarters of this year, Renminbi deposits in Hong Kong nearly doubled to 622 billion yuan, while Renminbi trade settlement conducted through banks in Hong Kong amounted to over 1,300 billion yuan.

In October 2010, the HKMA activated the swap for 20 billion yuan to support Renminbi trade settlement in Hong Kong thereby facilitating steady development of the business.