Hong Kong’s offshore renminbi transactions could grow more than 30 percent this year as companies hedge against volatility from a wider trading band, the Hong Kong Economic Journal reported Tuesday.
Average daily trading volumes are up 5-10 percent after China doubled the trading band to 2 percent on either side of the central bank’s daily reference rate, the report said, citing Kenneth Lau, Hong Kong-based head of rates trading at Standard Chartered Plc.
Spot and swap deals have breached US$20 billion a day.
Lau said companies are using renminbi forward contracts for hedging, shifting from non-deliverable forward (NDF) contracts, the traditional method of defending against forex fluctuations.
Renminbi forward deals are six times those involving NDF contracts.
Meanwhile, the renminbi’s bigger volatility has not adversely affected demand in the offshore renminbi bond market which has grown 29 percent to 740 billion yuan (US$118.41 billion) this year.
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