Home » China: yuan, futures on the onshore market to attract declining currency flows

China: yuan, futures on the onshore market to attract declining currency flows

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An onshore yuan futures market to attract declining foreign exchange flows. The central bank has made an unprecedented move challenging fears of speculative moves. Yuan futures will affect the exchange rate and the internationalization of the currency.
Meanwhile, foreign exchange reserves fell to 3.17 trillion (-1.09%) in March, for the first time in 11 positive months.

Beijing’s counter-move

The Central Bank is thinking seriously about it, a group of experts is working to prepare the turning point.
China is on the defensive, the geopolitical balances do not favor the internationalization of the currency, the decline in foreign exchange reserves is triggered, in fact they fell to 3.17 trillion in March from 3.205 trillion at the end of February.

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The decrease was 1.09% compared to the end of February. A worrying slowdown given the role played by foreign investments.

So why not follow the lead of overseas markets including the US, Singapore, Hong Kong and Taiwan? The Central Bank of China – it is confirmed – is working on the birth of an onshore futures market for the yuan “at the right time”.

Reserves in drastic decline

There is no yuan futures market in China because the regulatory authorities have long been concerned about speculation that could arise, with heavy risks for the system.
Meanwhile, however, China’s foreign exchange reserves declined by 1.09% from the previous month to the end of March 2021. Foreign flows recorded a significant setback. China’s foreign exchange reserves shrank to $ 3.17 trillion at the end of March from $ 3.205 trillion at the end of February, according to data from the State Foreign Exchange Administration (Safe).

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