HONG KONG: The Hong Kong Exchanges and Clearing Limited plans to introduce additional Renminbi currency futures contracts by June to provide more instruments to hedge foreign exchange risk.
These new contracts will include euro-yuan, yen-yuan, Australian dollar-yuan which will be settled in the yuan, and yuan-US dollar futures that will be settled in the US dollar, the bourse said in a statement.
"Cash-settled yuan currency futures are part of our plan to expand our product portfolio across asset classes," said Romnesh Lamba, the stock exchange's co-head of market development.
"These new products help extend and deepen our value proposition as the yuan is used more widely around the world."
Trading hours for these futures are 9:00 am to 4:15 pm, with after hours trading from 5:00 pm to 11:45 pm.
Investors' need to hedge currency risk has increased significantly, especially after a depreciation of the yuan last August caught many market participants off guard.
The existing US dollar-yuan futures, which is settled in yuan, had record high open interest of 32,009 contracts on Feb. 5, and average daily volume in the first quarter was 3,128 contracts, more than triple the same period last year.
The Chinese currency has lost more than 4 percent against the dollar in the past year and the market consensus is that it will continue to weaken this year.
Median forecasts from a Reuters poll of 65 strategists expect the yuan to ease to 6.58 per dollar by end-June and 6.70 by end-March in 2017, about 3 percent weaker from 6.47 earlier this month.
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