The Dubai Gold and Commodities Exchange (DGCX) is slated to launch a Chinese Yuan Futures contract over the next couple weeks, pending the requisite regulatory approvals, according to a DGCX statement.
The launch represents DGCX’s latest efforts to facilitate the use of the yuan to both regional and global participants amidst a parallel effort by China to help prioritize the trading and internationalization of its currency.
Earlier this month, the International Monetary Fund (IMF) added the RMB to its global currency reserve basket, a huge move for China as well as the currency in helping solidify it as a worldwide force. The decision followed after years of efforts by China to help demonstrate that its currency had met a plethora of requirements and regulations.
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As for the DGXC’s new contract, the instrument will be financially settled on the same day as other offshore equity index futures, which will hold a value of $50,000. Subsequently, the DGCX will also give an outright quote on the USD/CNY offshore foreign exchange (FX) rate, whilst enable traders to settle in USD should they so choose. Intermarket trading will also be available with other global exchanges currently offering the contract, which DGCX has reiterated will be tax-free.
The new contract is important as it will help satiate a growing appetite for offshore currency risk management tools, as well the interest in the CNH. In addition, the DGCX will be strategically placing itself to capture any inherent rise in the CNH’s use in the upcoming years.
According to Gaurang Desai, CEO of the DGCX, in a recent statement on the launch, “The launch of this contract perfectly complements the development of DGCX as the region’s leading derivatives exchange.”
“We are committed to providing the products that our participants want and are continuing with our ‘outside-in and inside-out’ approach, meaning we market regional products to global investors and global products to regional investors. We are providing a unique trading opportunity in the region to get involved in the Chinese currency market. Our participants are also able to trade DGCX commodities with Chinese Yuan exposure, and we believe this is a true advantage for our customers,” he added.