Hong Kong Monetary Authority data showed Friday that Yuan deposits in Hong Kong posted their biggest monthly drop on record in December. Data showed Savings in the Chinese currency fell 12.9 percent on the month to 546.7 billion yuan ($79.4 billion) in December, the biggest drop since local banks started taking such funds in 2004.

Onshore exchange rate fell 6.5 percent in 2016 on rising capital outflows amid higher U.S. interest rates. On a yearly basis, Hong Kong’s yuan savings fell by 304 billion yuan, the most on record.

“The drop in offshore yuan deposits confirms thin liquidity conditions in Hong Kong,” said Gao Qi, a Singapore-based foreign-exchange strategist at Scotiabank.

PBoC's efforts to curb capital outflows and suspected intervention as well as a decline in the U.S. dollar, have helped buoy the yuan in January. The offshore yuan is headed for a 1.6 percent advance this month, the most since October 2011. That said, uncertainty in the exchange rate will keep exerting pressure on the city’s yuan pool.

“In the coming months yuan liquidity will remain relatively tight in Hong Kong and offshore yuan interbank rates will surge again if worries about yuan depreciation resume,” adds Gao Qi.