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Screenshot of a breaking news alert e-mail from Q2 2017
China is set to allow trading in forwards and swaps between the yuan and three more currencies in an effort to reduce foreign-exchange risks amid increased volatility in emerging markets.
According to a report by Bloomberg today, The China Foreign Exchange Trade System (CFETS), which is a joint venture between the state-owned People’s Bank of China and British markets operator and provider of post trade risk mitigation ICAP, will begin such contracts with Malaysia’s ringgit, Russia’s ruble and the New Zealand dollar from today, it said in a statement on its website posted Dec. 26 in Shanghai. That will extend the yuan’s swaps trading to 11 currencies on the interbank foreign-exchange market.
A plunge in Russia’s ruble this month to a record low sparked a selloff in developing nations’ assets, leading to a surge in currency volatility. The new contracts come as China tries to increase the international use of the yuan, which the world’s second-largest economy promotes as an alternative to the U.S. dollar for global trade and finance. Malaysia and Russia are China’s eighth- and ninth-biggest trading partners, according to data compiled by Bloomberg.