Hong Kong will lift a daily cap for converting the local currency to the yuan to facilitate a trading link between the city’s bourse and Shanghai’s stock exchange. Hong Kong’s Monetary Authority (HKMA) Chief Executive Norman Chan said: “The yuan conversion limit for Hong Kong residents of CNY20,000 a day will no longer be set, effective on November 17.” Analysts say the lifting of the limit will bring easier access to yuan for local residents and encourage investors to use the currency. “This is a very key technical resolution for the Shanghai-Hong Kong Stock Connect,” Chan said. “Residents can get cash quickly to buy whatever amount of mainland shares, the hurdle will be cleared,” said Jackson Wong, Simsen International Financial Group Associate Director. The daily cap was established in 2004 when the city started allowing local banks to accept yuan for deposits. Hong Kong’s Chief Executive Leung Chun-ying said the new policy would “further promote the status of Hong Kong as an offshore yuan business center,” according to a statement released by the government. Controls will remain on yuan remittances to the mainland by holders of Hong Kong bank accounts. The daily limit of CNY80,000 will not change and cross-border travelers will still have to declare physical holdings of CNY20,000 or more. Allowing Hong Kong to settle all yuan trade locally will reduce the role of Shanghai’s onshore hub in internationalizing the currency. “Eventually, Shanghai will be forced to focus on only mainland corporate and individual clients, and that will not be enough for it to develop into a global financial center,” said Howhow Zhang, Research Director of Z-Ben Advisors.