With further developments on the Yuan taking place last week, the Hong Kong futures exchange has announced their intention to offer offshore Yuan Futures by the third quarter of 2012.
Hong Kong has long been a financial centre place for Chinese currency transactions.
HKEX aims to offer the product as a hedging tool for those exposed to the mainland currency – now expected to be more volatile after the widening of its daily trading band.
The yuan/US dollar futures contract will be quoted in yuan per US dollar and margined in yuan. Trading and settlement fees are also to be charged in the mainland currency, the local stock exchange operator said.
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The Yuan is currently trading at 6.307 against the greenback.
A single contract will cost US$100,000 (HK$780,000), with exchange and settlement fees to be determined later. Demand for such futures products – seen as a mean to control the yuan’s daily fluctuation – is expected to rise after the People’s Bank of China last week expanded the trading band for onshore yuan to 1 percent against the daily parity rate.
Offshore yuan values, though not subject to this restriction, closely mirror the mainland.
Leading FX broker FXDD recently introduced currencies including the Chinese Yuan and Indian Rupee.
Forexmagnates team have written a detailed report on FX in China, available in the Q4 2011 quarterly report.