HKEx, Thomson Reuters launch series of renminbi indexes

Thu Jun 23, 2016 6:17am EDT
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HONG KONG, June 23 (Reuters) - The Hong Kong Exchanges and Clearing Limited (HKEx) and Thomson Reuters on Thursday launched a series of renminbi indexes which measure the intraday performance of the yuan against a basket of currencies.

The index series provides market participants with benchmarks that reflect the development of the yuan's effective exchange rate against other major currencies and is designed to be transparent and tradeable.

The primary index measures the performance of the offshore yuan (CNH) against a basket of 14 key currencies, including the U.S. dollar (22.82 percent), euro (18.93 percent) and Japanese yen (12.79 percent).

The weight of each currency is determined by calculating the volume of trade between its issuer and mainland China, in accordance with publicly available data from UN Comtrade and the Hong Kong Census and Statistics Department.

"As Chinese capital goes global over the next 30 years and more international equities and commodities are priced in RMB, our RMB indices will become a useful basis for products to help investors manage currency risk," said Charles Li, chief executive of the Hong Kong bourse.

All indexes are calculated hourly using WM/Reuters rates, a leading foreign exchange (FX) reference for indexes and financial contracts worldwide.

While there has been bigger demand to hedge currency risk as the yuan is increasingly used in global trade, confusion over China's exchange rate policy and slowdown in the world's second-largest economy have also dampened investor appetite to use or hold the renminbi in recent months.

China's central bank orchestrated a sharp depreciation of its currency on Aug. 11 last year, which caught market players off guard and saw the yuan lose more than 5.5 percent against the dollar since then. (Reporting by Michelle Chen; Editing by Jacqueline Wong)