Renminbi liberalisation opens up hedging opportunities

The RMB is liberalising at a greater pace now than at any time in the past and despite a slowdown in growth, mainland authorities are pushing ahead with currency reforms


In April, the People’s Bank of China (PBOC) widened the RMB trading band with the US dollar from within 0.5% to within 1%. The currency can now float intraday within this 1% range but data from the Hong Kong arm of Japanese bank Mitsubishi UFJ Group (MUFG) shows that there is still a strong policy incentive to fix the currency away from the spot to control the band. However, the fixing is increasingly being undermined by the spot price moving away, prompting authorities to intervene directly to

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