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Investors turn to HKEX’s RMB products amid volatility

Investors turn to HKEX’s RMB products amid volatility

Written by HKEX

 

Intensifying trade tension between China and the United States has weighed on global markets in the past weeks. The RMB has declined to its weakest level against the US dollar this year, falling by more than 4 per cent in the past three weeks before stabilising. On the back of its fast depreciation and escalating volatility, some market participants have turned to the USD/CNH futures, premier hedging tool, to protect themselves from potential currency risk. As demand for RMB risk management grows, HKEX’s RMB derivatives products have continued to set several records.

HKEX

HKEX

HKEX’s USD/CNH Futures recorded an average daily volume of 8,097 contracts (notional US$810 million) in June, an increase of 173 per cent from 2017. Single-day volumes hit 21,686 contracts (notional US$2.17 billion) and 20,340 contracts (notional US$2.03 billion) on 3 and 4 July, marking fresh all-time records since the product launched in September 2012. The trading took place across all contract months, with the September contract leading the pack. On the same day, both HKEX’s USD/CNH Options and CNH/USD futures trading recorded all-time highs of 909 contracts (notional US$91 million) and 429 contracts (notional RMB 129 million) respectively since they were first introduced in March 2017 and May 2016.

HKEX

HKEX’s USD/CNH Futures recorded an average daily volume of 8,097 contracts (notional US$810 million) in June, an increase of 173 per cent from 2017. Single-day volumes hit 21,686 contracts (notional US$2.17 billion) and 20,340 contracts (notional US$2.03 billion) on 3 and 4 July, marking fresh all-time records since the product launched in September 2012. The trading took place across all contract months, with the September contract leading the pack. On the same day, both HKEX’s USD/CNH Options and CNH/USD futures trading recorded all-time highs of 909 contracts (notional US$91 million) and 429 contracts (notional RMB 129 million) respectively since they were first introduced in March 2017 and May 2016.

 

HKEX

The new record highs across HKEX’s RMB derivatives products have underpinned the leading role of Hong Kong as the largest international offshore RMB trading and risk management centre, where its comparative advantages lie in a number of factors including a large pool of RMB, international investor base and an efficient market infrastructure.

Original Article: https://www.hkex.com.hk/Products/Listed-Derivatives/Foreign-Exchange/Record-high-trading?sc_lang=en

 

Report: RMB and the implications of the RMB Currency index

 

Summary:

The RMB currency market has been under pressure as the trade war between the United States and China heats up. Since 2005, the currency basket adopted by the People’s Bank of China (PBOC) has become a major reference by the market in determining the RMB exchange. In 2015, the PBOC announced the adjustment of the quotation mechanism for the RMB/USD central parity rate, setting off a new round of exchange rate reform. The currency basket expanded further in 2016, and in 2017 a counter-cyclical factor was introduced which enhanced the anchoring role of the currency basket for determining the RMB central parity rate.

This report looks at the RMB reference currency basket and analyses how a market-based RMB currency index lays a foundation for the development of RMB risk-hedging tools, especially during times of market volatility. To read the report visit English version or Chinese version.

 

Chinese version: http://www.hkex.com.hk/-/media/HKEX-Market/News/Research-Reports/HKEx-Research-Papers/2018/CCEO_RXY_201807_c.pdf?la=zh-HK

English: http://www.hkex.com.hk/-/media/HKEX-Market/News/Research-Reports/HKEx-Research-Papers/2018/CCEO_RXY_201807_e.pdf?la=en