China has sold new bills in Hong Kong for the first time ever. The People's Bank of China auctioned off 20 billion yuan in bills this week in a move aimed at managing the yuan's liquidity in offshore markets. Britt Clennett talked to analysts about the impact on the market.

It's a first for China's central bank which on Wednesday (November 7th) began auctioning bills out of Hong Kong. 10 billion yuan - or 1.4 billion US dollars - in three-month bills priced at a coupon of 3.79 percent. Another 10 billion yuan in one-year bills came in with a coupon of 4.20 percent. The Bank of Communications is the issuing and lodging agent for the deal that will see applicants compete in a bidding system before settlement is held on Friday (November 9th). The aim is to improve the currency's yield curve and boost the range of yuan-denominated products of high credit rating in Hong Kong.

XIA LE, CHIEF ECONOMIST FOR ASIA BBVA RESEARCH "If you check the Hong Kong market I think they happen to owe the offshore financial market. There is not enough investment instruments for this RMB. So it will be a good thing for the Chinese authorities to introduce more financial market of course the RMB dominated financial products to this offshore RMB markets."

The move comes at a challenging time for the Chinese currency - which is at a 10-year low to the US dollar. In fact, the yuan has lost more than 6.5 percent of its value to the dollar since the beginning of this year. One could argue the batch of bills being issued in Hong Kong is relatively small - But analysts say it's a signal the PBOC is eager to pare back the volatility of its currency.

CHAOPING ZHU, VP, MARKET STRATEGIST JP MORGAN ASSET MANAGEMENT "For domestic market, I think the major impact will still be on the exchange rate of RMB. Because we've seen there's more coalition between the offshore and onshore exchange rates. And if the PBOC could stabilize offshore market, It will also affect onshore market and make onshore market more stable."

BRITT CLENNETT "Hong Kong is the world's biggest offshore yuan clearing center – but as the central bank tests the waters in a bid to steady the yuan, this could also be a sign of things to come."

XIA LE, CHIEF ECONOMIST FOR ASIA BBVA RESEARCH "In Hong Kong they have a special meaning because the Hong Kong government wants to establish Hong Kong as a wholesale RMB offshore market for all this RMB business in the world. So they will start with Hong Kong and I think in the future, definitely they will have more issuance in Hong Kong but this could also extend to other important RMB business hubs around the world."

Some analysts say the timing of all this is no coincidence - as tightening offshore liquidity tends to raise the cost of short selling. And that the Chinese central bank is pre-empting possible short-yuan positions built following the US mid-term elections. Britt Clennett, CGTN, Hong Kong.