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China's forex moves to increase volatility, trading volume: analysis

Xinhua, December 27, 2015 Adjust font size:

The latest changes to China's forex market management will increase yuan volatility and boost trading volumes, according to a leading Chinese investment firm.

From Jan. 4, closing time for China's interbank foreign exchange market will be extended from 4:30 p.m. to 11:30 p.m. Beijing time, the People's Bank of China announced last week, adding foreign institutions' access to the market will also be expanded.

The yuan exchange rate may become slightly more volatile, China International Capital Corp. (CICC) said in an analysis note.

By overlapping the trading hours with those of London, the spread between onshore and offshore yuan exchange rates will be narrowed, bringing down the technical difficulty for RMB users to hedge forex risk, it said.

After the changes, China's forex market is set to grow, especially in terms of trading volume, which represents a major opportunity for financial institutions with forex expertise and cross-border capacity, the CICC predicted. Endi