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By Bloomberg

Yuan forwards in Hong Kong rose, halting a two-day loss, on speculation demand for the currency will rise as the city removes a limit on amounts locals can buy.

Hong Kong will scrap a 20,000 yuan ($3,266) daily conversion cap for permanent residents on Nov. 17, the same day that a stock trading link between the city and Shanghai starts. BOC Hong Kong Holdings Ltd., the territory’s yuan-clearing bank, said it will offer yuan margin trading for A-shares as well as mortgages and personal loans in the Chinese currency.

“Demand for yuan in Hong Kong will be rising as the stock connect is about to start, which will support the offshore exchange rate,” said Kenix Lai, a Hong Kong-based currency analyst at Bank of East Asia Ltd. “The conversion limit removal will fuel the start of more yuan investment products.”

Twelve-month non-deliverable yuan forwards strengthened 0.07 percent to 6.2685 per dollar as of 4:35 p.m. in Hong Kong, according to data compiled by Bloomberg. In Shanghai, the yuan rose 0.02 percent to close at 6.1248, China Foreign Exchange Trade System prices show. The People’s Bank of China raised its daily reference rate by 0.02 percent to 6.1418 today.

The onshore spot rate was 0.28 percent stronger than the fixing, within the 2 percent limit. The offshore currency gained 0.03 percent to 6.1312 in Hong Kong.

China’s industrial production rose 7.7 percent from a year earlier in October, official data showed today, lower than the 8 percent median estimate in a Bloomberg survey. The nation’s leaders have discussed cutting the 2015 economic growth target to below this year’s level of about 7.5 percent, said a person with knowledge of the talks.

The PBOC is gauging city commercial banks’ demand for funds to support lending to small enterprises, according to an official with knowledge of the matter.

The Hong Kong Monetary Authority said yesterday it plans to complete an investigation into banks’ local foreign-exchange operations by the end of the year. The regulator said the probe has reached an advanced stage.