China to waive forex derivative trading fees for small companies

SHANGHAI: China will waive forex derivative trading fees for small companies to help them better hedge against currency risks in a virus-hit economy, the operator of China’s interbank market said on Wednesday.

The notice by the China Foreign Exchange Trading System (CFETS) came amid spiking volatility in the yuan, which plunged against the dollar over the past week amid worries about China’s economic health, and the country’s evaporating yield advantage.

The move is aimed at “further supporting the real economy, and reducing companies’ hedging costs,” CFETS said.

According to the notice, trading frees for derivatives including yuan forwards, swaps and options will be waived for two years.

China’s central bank has been encouraging companies to use derivatives to hedge risks, rather than make one-way bets on the yuan, as it deepens reforms of the yuan market and tolerates greater volatility.