Phased withdrawal of speculative capital led to devaluation of the RMB
Greek sovereign debt crisis escalation of the international capital Huangbuzelu rushed
towards the dollar, according to U.S. Commodity Futures Trading Commission
(CFTC) latest data show, the Chicago International Monetary Market (IMM) foreign
exchange speculators in long positions last week to continue holdings to 16.24 billion
U.S. dollars U.S. dollar, the level of net long positions to August 26, 2008, the highest
Sudden strong dollar expense of others, let the expected after a strong appreciation of
the yuan has only &quot;interim&quot; devaluation, and arbitrage capital,
hedge funds, funds of domestic enterprises, traders and other despotic various quarters
have bet in the overseas market, the yuan Non-deliverable forward contracts (NDF)
market exchange rate life and life to suppress.
May 6 session, NDF dollar against the yuan hit a one-year forward contracts on
December 22 last year the highest since 6.6985.
Domestic short selling opportunity
With the RMB settlement of cross transactions and strong appreciation of the scale is
expected to grow gradually, and the brightest of capital are beginning to actively
participate in the RMB forward gold trading opportunities - including hedge funds
active call and the hot money of RMB, the yuan is also a timely short-selling
investment institutions .
During the recent dollar gains, such as rainbow, naturally, many people took the
opportunity to go short.
CASS Institute of World Economics and Politics Zhang Ming, deputy director of the
international financial room that, at present, short RMB NDF market, there are many
Chinese companies. RMB interest rate based on U.S. dollar lending rates much higher
than the consideration, some large domestic commercial banks to borrow low-interest
business Pianxiang dollar loans, and then participate in U.S. dollar to RMB domestic
investment or business needs, thus taking of between RMB and U.S. dollar credit
Only, low-interest dollar loans Borrowing equal to those of state-owned enterprise
assets, a dollar increase in balance sheet liabilities, in order to lock the exchange rate
fluctuation risk, they usually NDF market in Hong Kong, the yuan against the U.S.
dollar amount sold forward foreign exchange contracts, the term dollar loans with the
&quot;The problem is, once the rapid appreciation of the yuan against the dollar,
more than their original settlement price forward contracts, hedge contracts may result
in their loss instead. So they always take advantage of rapidly rising dollar period,
timely short selling of RMB Yuan of prices to ensure their profit hedging in floating
state. &quot;one Japanese trader said.
RMB NDF market in Hong Kong, short selling an additional new force, from the
import of domestic trading in euros. As the escalation of the Greek sovereign debt
crisis, the euro against the dollar has fallen to new lows near 1.2735, many European
manufacturers to use domestic import traders asked the U.S. dollar clearing trade loan.
In the latter case, the current dollar rally too quickly, meaning they will likely have to
pay more money to pay the RMB against the dollar.
&quot;So they desperately need to call in the NDF market to buy dollars against
the yuan&#39;s long-term contracts, locking the exchange rate risk.&quot;
The Japanese traders said that they can continue to be an indirect one-year U.S. dollar
against the yuan hit a one-month forward contracts, a new high of important driving
But the &quot;Behind the scenes&quot; of the assets is very high, is still
Wing Lung Bank Head Xu Bingkun Treasury said the current set of security
institutions and many traders have NDF investment by Hong Kong banks to
participate. In a Financial Times survey, the current NDF market in Hong
Kong&#39;s average daily trading volume should be 3.0 billion -50 billion.
Short-term withdrawal of speculative capital
In addition to industrial capital, bends with the wind, the appreciation of the RMB had
enthusiastically participated in the withdrawal of speculative funds, but also
objectively led to the fall of RMB exchange rate.
The world&#39;s largest currency hedge fund FXConcepts LLC Lord 席约翰泰
勒 recently pointed out that the Asian currencies against other currencies will have a
certain appreciation. He believed that Asian countries earlier than the rest of the world
out of recession, and decided to sell the euro in the next 12-18 months, and buy
related to Asian currencies. Concepts of hedge funds managed assets of more than 9
billion U.S. dollars.
This reporter learned that the current through the NDF market to buy up Hong
Kong&#39;s RMB forward contracts, hedge funds, primarily event-driven hedge
funds, macro hedge funds, foreign investment mainly based hedge fund. Particular
type of hedge funds and more foreign investment to the main carry trade, borrowing
low-interest U.S. dollar, high interest rates of RMB investment. In appreciation of the
renminbi under the same trend, they urgently need to call through the NDF market to
buy forward contracts lock the RMB exchange rate exchange rate fluctuations.
However, on May 4 the third time this year, China&#39;s central bank raised
bank reserve ratio, but also to their &quot;throwing a bucket of cold
&quot;Hedge funds had bet on the central bank will raise interest rates or the
appreciation of the way as soon as possible to inhibit the rapid expansion of domestic
credit scale and rapid economic growth, the rapid appreciation of the yuan to have
more reasons, but now they are disappointed.&quot; A Hong Kong hedge fund
managers said. At present, some hedge funds began to settle from January to March
NDF RMB forward contracts position.
In addition, some turned to arbitrage capital has increased the pressure on the yuan.
Back in early March, the global foreign exchange strategy at Standard Chartered Bank
Research Group&#39;s latest report noted that, when the NDF and the territory
outside the period of NF offer spreads widened, in particular the one-year offer
spreads over 1,000 basis points, meaning that arbitrage investment in the NDF market
to sell 10 million U.S. dollars, in the territory of the forward (DF) corresponding
matching the market to buy dollars, thus risk-free arbitrage can be about 100 million
&quot;To the end of April, the Hong Kong one-year renminbi non-deliverable
forward contracts (NDF) and within the forward (DF) offer a discount of between
steady at about 2,000 points, attracting a large number of arbitrageurs are
involved.&quot; Aforementioned Japanese trader analysis said.
Standard Chartered Bank (Standard Chartered) in Hong Kong, head of foreign
exchange transactions 杰拉德卡茨 (GerrardKatz) revealed that, in the Standard
Chartered Bank, the RMB against the U.S. dollar volume of forward transactions
more than doubled over the past 6 months, the current performance of hedge funds in
But with the dollar index has been in May quickly rose to 84.30 from 81.82, the basic
point of difference between the two began to tend to reduce arbitrage investors would
start taking &quot;sell dollars&quot; of the period of NDF contract is in
effect a &quot;buy up&quot; the dollar yuan forward contracts, leading to a
rapid decline in the RMB forward rate.
Many of these closed funds have turned to buying dollars. According to the U.S.
Commodity Futures Trading Commission (CFTC) latest data show, the Chicago
International Monetary Market (IMM) foreign exchange speculators to continue to
increase them in the long positions last week to 16.24 billion U.S. dollars, the level of
net long positions to August 26, 2008, the highest since after a week of net long dollar
positions only 9.78 billion U.S. dollars.
Ended at 5:30 p.m. on the on May 6, the U.S. dollar index rose 84.21 poised nearby,
once the highest point on the previous year high of 84.51.