FX:
On December 9, the China Foreign Exchange Trade System (CFETS) announced that seven new currencies would become directly tradable with the onshore renminbi (CNY) in the mainland foreign exchange (FX) markets starting Monday. The currencies are, in order of announcement, the Mexican peso, the Turkish lira, the Norwegian krone, the Swedish krona, the Danish krone, the Polish zloty, and the Hungarian forint. This brings the total of directly traded currencies to 23. Traders can now access the pairs across spot , forward and swap markets, CFETS said in its statements. People’s Bank of China will announce the central parity rate for each pair every trading day at 9:15am, with a trading band of plus/minus 5%.
PBoC set the dollar fix on December 12 at 6.9086, 114bp weaker than the previous session. In the spot markets, the CNY was trading at 6.9144 as of 11:20am, 0.09% down. The offshore RMB (CNH) was trading at 6.9257, 0.04% stronger than the close.
Meanwhile, the CFETS index based on a basket of currencies closed on December 9, at 94.8, down 0.2%, the special drawing rights basket was 0.03% weaker at 95.35, and the Bank for International Settlements index was 0.04% weaker at 95.82. The Thomson Reuters CNH index closed the week at 95.25, 0.05% lower than December 2.
Hubs:
After nearly two years since news first broke, PBoC confirmed on December 9 that it had appointed Agricultural Bank of China Dubai Branch as the official RMB clearing bank in the United Arab Emirates (UAE).
The China Europe International Exchange ( Ceinex ) in Frankfurt introduced on December 8 an RMB exchange-traded fund targeting stocks listed on the Shanghai Stock Exchange (SSE). The Shanghai Stock Exchange 50 A Share Index UCITS ETF comes from Bank of China International and Commerzbank, tracking the corresponding SSE 50 index, and was previously listed on Deutsche Boerse. The base currency of the fund is the RMB and the currency of the share class is the euro. Total fees for the ETF are 0.84% per year, Ceinex said in a statement. According to the Deutsche Boerse website, the fund had assets under management of €9.34m at the end of October 2016.
A survey by the Securities and Futures Commission of non-listed investment products found that 10% of currency-linked structured products targeted RMB assets, while dollar-euro products accounted for 59%, followed by pound-dollar products with 13%.