Implied overnight interest rates for China's yuan hit a record high of 94 percent in Hong Kong on Tuesday, as suspected intervention from the Chinese central bank drained liquidity in the offshore market. In a volatile day's trading, the last Reuters data for the market showed rates falling back to around 5 percent by 0900 GMT. Dealers in London said that fall had been driven by some international players seeking to place yuan funds late, having missed out on the far higher rates quoted earlier in Hong Kong.

"It is very volatile. I would not rule out rates spiking again tomorrow," said a dealer with one international bank in London. "It will take at least a few days for things to calm down, if they do." That followed an extraordinary 24 hours in Hong Kong money markets, which saw the return for depositing the yuan soar, first to around 40 percent on Monday, and then 94 percent on Tuesday - although some dealers said there had been trades between banks at even higher rates. That increased the cost of funding for speculators wanting to sell forward contracts in the yuan as China battled to get the yuan's offshore and onshore exchange rates under control.

Copyright Reuters, 2016