Feb 17, 2011 06:57 PM

China to Launch Yuan Option Trading

(Beijing) -- China's foreign currency regulator has decided to launch the trading of yuan options against other currencies on the interbank market from April 1, in an effort to push forward the internationalization of the Chinese currency.

The State Administration of Foreign Exchange said in a statement on February 16 that the option trading will be European style, which means businesses will be allowed to buy call and put options from banks, but not to sell them unless they are squaring positions.

SAFE said that the yuan's flexibility has increased in recent years, which laid the foundation for the launch of options trading.

It also said the launch is meant to help banks and enterprises hedge against foreign exchange risks.

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