Major US exchange to deliver yuan offshore contracts in HK

The internationalization process of the yuan has been given a major boost by the Chicago Mercantile Exchange.

On Monday, the owner of the world's biggest futures exchange will launch deliverable offshore yuan futures in Hong Kong by offering three-year contracts worth either $100,000 or $10,000. These are price ranges that will attract both hedge funds, retail traders and a generally more diversified client base, analysts believe.

KC Lam, the Singapore-based head of foreign-exchange products in Asia for the CME Group, said China's economic status - as the world's second-largest economy, the largest exporter and second-biggest importer - will lead to a growing global demand for its currency.

"Our decision to launch the USD/CNH (renminbi traded offshore) foreign exchange futures contracts is primarily commercially driven," Lam said.

The yuan has been used for business transactions in multiple offshore locations including Hong Kong, Singapore, and Australia. "Hong Kong is the choice for the offshore RMB launch due to its thriving commercialism and it is the doorstep of China," Lam said.

To move to the next stage of yuan internationalization, trading in the currency needs to become global and accessible to a diversified client base, "across hedge funds, proprietary trading firms, banks, as well as corporate and retail accounts," Lam said.

Bank of China - a key Chinese player in terms of promoting global business in yuan - formed a strategic alliance with the CME Group in March.

Related:

Yuan business launched in Taiwan

BOC's Taipei branch to conduct yuan business

Yuan sees more international use in Nov

The steady advance of the yuan

Yuan loans from HK could hit 50b

Full convertibility of yuan ruled out