According to Xinhua Finance and Economics on March 7, the Chicago Mercantile Exchange (CME) of the United States recently said that it would launch options based on USD/offshore RMB futures on April 3.
"This is an important step forward in the internationalization of RMB." Liang Haiming, president of the the Belt and Road Research Institute of Hainan University, told the Securities Daily that the introduction of offshore RMB options will meet the growing commercial demand of international investors for RMB. When the international market uses RMB more in the fields of commodities, raw materials and trade, it can provide a more powerful tool for international investors, so that international investors can use more complex hedging and trading strategies in the financial market, and more flexible to deal with the risk of exchange rate fluctuations.
CME said that the US dollar/offshore RMB option to be launched in April is expected to increase the trading volume while allowing investors to access a wider range of financial products.
Pang Ming, chief economist and head of research department of Jones Lang LaSalle in Greater China, said in an interview with the reporter of Securities Daily that with the improvement of the formation mechanism of RMB exchange rate marketization and the orderly promotion of RMB internationalization, the RMB exchange rate as a whole showed a two-way fluctuation trend and continued to increase elasticity. The offshore trading volume of RMB increased rapidly and the market depth continued to expand. It can be said that the liquidity, volatility, pricing basis and other conditions and elements required for relevant derivative transactions have been fully met.
With regard to the impact of the proposed US dollar/offshore RMB option transaction launched by Chishang Exchange, Pang Ming further said that this would provide more diversified exchange rate hedging tools for enterprises and financial institutions in need, and would also help to attract more long-term investors and professional investment institutions to participate in the transaction by improving the convenience of the transaction, thus enriching the trading varieties of the offshore RMB market, making the spot, forward, swap The share of options and other transactions is more balanced, and the price discovery function and resource allocation are improved through portfolio investment.
Chen Li, chief economist of Chuancai Securities and director of the research institute, told reporters that the introduction of the above option transaction would help promote the orderly progress of RMB internationalization.
"At present, the internationalization of the RMB is facing some relatively good environment and opportunities." Pan Gongsheng, deputy president of the People's Bank of China and director of the State Administration of Foreign Exchange, said at the series of thematic press conferences on the "opening of authoritative departments" held by the State Administration of Foreign Exchange on March 3 that after more than ten years of development, with the establishment of the RMB clearing bank and the local currency swap network, the development of the offshore RMB market, and the opening of the domestic financial market, As well as the continuous improvement of overseas layout of Chinese-funded financial institutions, the RMB has initially possessed the network effect of international use.
According to the data of the Bank for International Settlements quoted by Xinhua Finance and Economics, in 2022, the RMB accounted for 7% of all foreign exchange transactions in the world, surpassing the Australian dollar, Canadian dollar and Swiss franc to become the fifth largest trading currency in the world. Last year, the trading volume of RMB options almost doubled compared with three years ago.
Chen Li said that the increase in the trading volume of RMB options also showed that with the high-quality development of China's economy and society, the international attractiveness of Chinese assets was gradually increasing, and the investment demand of international investors for RMB was significantly enhanced.
"The RMB is getting more and more attention from the international market, and a series of achievements in RMB internationalization not only benefit from China's high-quality economic development and the continuous progress of the the Belt and Road Initiative, but also reflect the international community's vote of confidence in China's development," Liang Haiming said.
