SHANGHAI, June 26 China's foreign exchange regulator said it
will increase the number of foreign exchange derivate products available in the
market to facilitate export growth and help companies hedge currency risk.
The State Administration of Foreign Exchange (SAFE) said in a statement on
its website that it would strengthen supervision of derivatives trading by banks
to ensure that the trade helps reduce risks for companies, and expand the
variety of tools available, focused on foreign exchange options.
The statement said it would add principal swap transactions for currency
swaps and lower the entry threshold for companies and bank branches.
SAFE has been moving to help Chinese firms cope with an increasingly
volatile domestic exchange rate after the People's Bank of China (PBOC) set off
a steep depreciation in the value of the yuan earlier this year, then followed
up by widening the intraday trading band to 2 percent on either side of the
official daily fixed rate.
That depreciation led to significant currency derivative losses by Chinese
companies, in particular airlines, many of which had bet heavily on the yuan
continuing to appreciate.
(Reporting by Pete Sweeney; Editing by Eric Meijer)