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by Ashraf Laidi
Posted: Feb 22, 2010 5:00
Comments: 2338
Posted: Feb 22, 2010 5:00
Comments: 2338
Forum Topic:
USD
Discuss USD
based on fixed yuan per ton.
Actually its a loss.
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By JEAN YUNG and ESTHER FUNG
SHANGHAIChina will allow banks to trade currency swaps for corporate clients starting March 1, extending the use of the financial derivative beyond the interbank marketa move that facilitates corporate foreign hedging as Chinese trade continues to expand and cross-border investments accelerate.
The announcement comes as Beijing steps up efforts to let the yuan be used more widely outside China, loosening its grip on the currency as it aims to become less dependent on the dollar for trade and investment. Earlier this month, China launched a pilot program to let domestic companies take Chinese currency overseas to invest, building on an experiment that allows Chinese and foreign companies to settle cross-border trade in yuan.
The currency swap is an arrangement in which two parties exchange specific amounts of yuan and another currency, and a series of interest payments on the cash flows.
Traders said foreign companies, in particular, are eager to enter into currency swaps as a way to hedge interest-rate risks from bonds, loans and other types of debt denominated in yuan.