Offshore yuan borrowing rates spike

The cost of borrowing offshore yuan in Hong Kong's interbank market surged Monday as the amount of spare renminbi in the banking system declined.

Hong Kong Interbank Offered Rate (Hibor) tied to the offshore rose across maturities to their highest levels since the benchmark was created in 2013. The overnight rate climbed to 13.396 percent from 4.0055 percent Friday and the three-month rose to 7.242 percent from 6.333 Friday.

The offshore yuan Hibor is different from the more widely-followed Hibor tied to Hong Kong dollars. Bank of China estimated in March that daily volumes in the offshore yuan interbank market were $5 billion to $8 billion on average. That's a fraction of the Hong Kong dollar-tied Hibor.

"It tells us that the market is quite concerned about the new high by dollar-offshore yuan (pair)," Philip Wee, senior currency economist at DBS Bank, told CNBC. "But that said, the Hibor is a very volatile instrument. Whenever it spikes, it also tends to come back down."

There are fewer yuan going in the offshore market as the People's Bank of China has intervened in recent sessions to narrow the gap over more tightly-controlled onshore rates while yuan holders have also transferred yuan back to the mainland to take advantage of the slightly higher rates there.

The offshore yuan currently trades at 6.6651 against the dollar, while the onshore rate is at 6.5818.