Dubai: The Dubai Gold and Commodities Exchange, DGCX, is scheduled to launch Chinese yuan futures on December 18, subject to regulatory approvals, as part of the exchange’s efforts to make the yuan accessible to regional and global participants as China prioritises its internationalisation and is currently the fourth most traded currency in the world.
The contract will be financially settled on the same day as offshore equity index futures, and will hold a value of $50,000 (Dh83,500). It will also give an outright quote on USD/CNY offshore FX rate, and will enable traders to settle in US dollars. Intermarket trading will be available with other global exchanges that offer the contract, and will be tax free (no transaction tax and no capital gains tax).
Gaurang Desai, CEO of the DGCE, commented, “The launch of this contract perfectly complements the development of DGCX as the region’s leading derivatives exchange. We are committed to providing the products that our participants want and are continuing with our ‘outside-in and inside-out’ approach, meaning we market regional products to global investors and global products to regional investors. We are providing a unique trading opportunity in the region to get involved in the Chinese currency market. Our participants are also able to trade DGCX commodities with Chinese yuan exposure, and we believe this is a true advantage for our participants.”
The USD/CNH futures contract will serve to address the growing needs for offshore currency risk management tools, such as hedging for trade financing flows and CNH deposits, risk overlay and hedging for foreign fund managers.
“We are pleased with this upcoming launch, and continue to strategically work towards global expansion and outreach with every new product that we add to our portfolio,” Desai concluded.