China lets overseas yuan clearing banks trade onshore FX market
Beijing has for the first time allowed overseas yuan clearing banks to deal directly in China's onshore foreign-exchange market, part of a pilot program to widen international use of the renminbi.
The China Foreign Exchange Trade System (CFETS), which runs the country’s interbank currency market, said on Monday that four overseas branches of Chinese banks had already carried out initial trades under the scheme with both domestic and foreign financial institutions.
The move gives yuan clearing banks based outside mainland China direct access to onshore trading, a channel previously closed to them.
The pilot forms part of broader efforts by Chinese authorities to encourage wider global use of the renminbi in trade and finance, building on existing yuan clearing arrangements with banks in multiple financial centers abroad.
This is relevant for the yuan-dollar relationship and broader Asian currency trading: easier onshore access for offshore clearing banks can deepen liquidity in the renminbi market and may gradually influence how USD/CNY and related pairs trade as more institutions gain direct channels to Chinese FX markets.
Source: Caixin Global