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Hong Kong to Let Banks do Business in China's Renminbi Currency - 2003-11-24

Hong Kong banks will be permitted to do business in China's currency, the renminbi. And Indian banks make headway cutting down on bad loans.

Hong Kong's leader Tung Chee-Hwa spoke of the potential benefits to Hong Kong's economy when banks are allowed to do business in the renminbi or yuan - China's tightly controlled currency. "As our economy and the mainland economy becomes closer and closer, I think this business could develop into a very large business," he says.

The easing of controls over the highly regulated renminbi comes at the same time as a package of trade concessions recently approved by Beijing, which allow Hong Kong firms greater access to China's market.

Hong Kong banks will be able to take yuan-denominated deposits from Hong Kong residents, exchange Chinese yuan for Hong Kong dollars and vice versa. The new banking services may be available by year-end.

Also in Hong Kong, new economic data shows the territory has seen five full years of deflation.

October prices were down 2.7 percent after recording a drop of three point two percent in September. The government says the more narrow decrease was due to an pickup in the economy. Consumer prices in Hong Kong started falling after the Asian financial crisis.

Australian cargo-handling and transport company Patrick Corporation announced a 48 percent increase in net profit for the 12-month period ending September 20.

The company says its 50 percent investment in budget airline Virgin Blue boosted profit. The two corporations are selling shares in 25 percent of the airline in an initial public offering.

Brett Godfrey, Virgin Blue's chief executive, said Virgin Blue is expecting big increases in passenger numbers. "We taken a lot of aircraft on in the last month and a half … and as a consequence of that we start the year some 30 percent up in terms of our capacity," he says.

The Reserve Bank of India says India's banks cut bad loans by about $440 million to 8.8 percent of their gross loans. The central bank attributed the decline to improved risk-management practices and greater efforts to recover loans.