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| Foreign Currency Market |
Companies could buy the options from banks. They could only take reverse positions against options that had been bought, but are not allowed to sell their options.
According to statistics released by the market operator, as of 11 a.m., China Foreign Exchange Trade System had struck seven deals of the RMB against the US dollar options, with the length of option period from one month to six months and the notional principal amount at 41.9 million US dollars.
It is learned that China Foreign Exchange Trade System is authorized to publish the average market implied volatility curve at 15 past four p.m. every trading day. The curve reflects an overall market expectation of the future exchange rate fluctuations, which is good for the risk management of banks and the establishment of benchmark index system for China's foreign exchange market.
An official in charge of the matter at the market said that as the flexibility of RMB exchange rate has been greatly increased, the launch of RMB exchange rate options trading provides enterprises and banks a hedging tool against the exchange rate risk, promoting the further development of the country's foreign exchange market.
Sources: http://www.istockanalyst.com
