BloombergChina will allow trading in forwards and swaps between the yuan and three more currencies in a bid to reduce foreign-exchange risks amid increased volatility in emerging markets.
The China Foreign Exchange Trade System will begin such contracts with Malaysia’s ringgit, Russia’s ruble, and the New Zealand dollar from Dec. 29, it said in a statement on its website today. 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 amid efforts by China to increase the international use of theyuan, as the world’s second-largest economy promotes it 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.
“This will provide companies with better hedging tools, and at the same time, make currency trading more efficient,” said Ju Wang, a senior currency strategist at HSBC Holdings Plc in Hong Kong. “China won’t stop yuan globalization or capital-account opening because of the volatility in emerging market currencies.”
The CFETS is an agency under the People’s Bank of China.
To contact Bloomberg News staff for this story: Helen Sun in Shanghai athsun30@bloomberg.net
To contact the editors responsible for this story: Andrew Janes atajanes@bloomberg.net Shikhar Balwani
The world is washing its hands of the U.S. Dollar.
“This will provide companies with better hedging tools, and at the same time, make currency trading more efficient,” said Ju Wang, a senior currency strategist at HSBC Holdings Plc in Hong Kong”
Wouldn’t a ‘one world’ currency make things much more efficient?
But I don’t suppose you’ve thought of that, right?
We had a ‘one world ‘ currency,the US dollar, but the rest of the world is running from our dollar to currency backed by something of value like gold and other assets.
Petrodollar.