China mulls extending onshore yuan trading hours – sces | Photo credit: Shutterstock
BEIJING, June 27 (Reuters) – China is considering extending yuan trading hours in the onshore market, four sources familiar with the matter said, a move that could boost foreign investor demand for the currency.
The People’s Bank of China has polled some of the major market participants, asking for their views on a possible extension of session times to 7:00 p.m. GMT from the current 3:30 p.m. GMT, the sources said.
“Covering global market hours is part of the International Monetary Fund (IMF) requirements for currencies in the Special Drawing Rights (SDR) basket,” one of the sources said.
Extended hours would cover a large part of the trading day in Europe and the United States and could allow foreign investors to better hedge their currency risk.
The IMF increased the weighting of the yuan in its currency basket from 10.92% to 12.28% in mid-May, the first revision since the Chinese currency integrated it in 2016.
The National Administration of Foreign Exchange Control (SAFE) did not immediately respond to a request for comment.
“A longer session for currency trading may give market participants more flexibility and therefore incentivize more global use of the yuan,” HSBC analysts said in a note.
“Additionally, an increase in onshore yuan trading volume outside of conventional Asian trading hours may provide more insights into offshore yuan trading and narrow the onshore-offshore gap,” they added. (Reporting Han Xiao in Beijing, Zhang Jindong and Winni Zhou in Shanghai and Tom Westbrook in Singapore, French version Laetitia Volga, editing by Kate Entringer)