HONG KONG residents haven’t been this excited about the yuan before a currency devaluation in 2015.

Bank customers in the city have added net 163 billion yuan (US$25 billion) in savings denominated in the offshore yuan over the past year, about four times the pace of the previous 12 months, according to official data.

The last time they bought at a faster rate was in 2014, just before a devaluation saw the currency enter a downward spiral the following year.

The scramble for yuan is being driven by a number of factors, including speculation the currency will continue to strengthen after rising more than 5 percent against the U.S. dollar over the past 12 months.

The yuan is also in favor due to Chinese 10-year bond yields that are more than double those on similar-maturity U.S. Treasuries.

The buildup of yuan deposits in Hong Kong may get another fillip in the near future with the expected launch of two new channels aiming to boost investment flows between Hong Kong and the mainland.

One is the southbound leg of the bond connect program, that will give mainland investors a route to buy overseas debt.

The other is a new wealth management connect facility, which will allow them to purchase investment products in Hong Kong and Macao.

“The launch of the connect programs is further burnishing Hong Kong’s credentials as China’s gateway between East and West, and bodes well for a future buildup of yuan deposits offshore,” said Eddie Cheung, a senior emerging-markets strategist at Credit Agricole SA in Hong Kong.

“As offshore yuan deposits grow and the channels through Hong Kong are launched, then we would expect greater offshore yuan turnover.”

A key driver of yuan demand is an expectation it will remain resilient despite the prospect of the Federal Reserve cutting back on bond purchases, a move that should support the U.S. dollar.

The yuan is seen being bolstered by robust capital inflows and China’s cautious employment of stimulus. The yuan is one of the only two Asian currencies to appreciate versus the greenback this year.

The offshore yuan was at 6.4391 yesterday after appreciating to 6.3525 in May, the strongest level in three years.

Not everyone is convinced yuan deposits in Hong Kong will keep increasing. (SD-Agencies)