China extends trading with Yuan against AUD & CAD interbank market

China will launch the trading of the Australian dollar (AUD) and the Canadian dollar (CAD) against the yuan on the interbank foreign exchange market starting from Nov. 28, the China Foreign Exchange Trade System (CFETS) announced Thursday.

The move followed the introduction of the Malaysian ringgit and the Russian ruble into the interbank Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term market last year and marks the government's latest effort to make the yuan an international currency.

The CFETS said in a statement on its website that it will provide quotations for spot, forward and swap transactions between the AUD and the yuan as well as between the CAD and the yuan.

On the spot market, the two foreign currencies can trade within 3 percent around their daily central parity rates set by the central bank, said the statement.

The central parity rates of the AUD and CAD against the yuan will be based on the central parity of the yuan against the U.S. dollar of the same business day and the exchange rates of the AUD and CAD against the U.S. dollar at 9 a.m. of the same business day, it said.

China now allows interbank trading between the yuan and the U.S. dollar, HK dollar, Japanese yen, euro, British pound, Malaysian ringgit, and Russian ruble.

China has been liberalising the Yuan with both on shore and off shore trading, complex products like options and Swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term have been trading in the inter-bank market.

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