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HKEx has already introduced US$, Euro, Yen and A$ to CNY(HK) futures, and CNY(HK) to US$ futures. Among them, the US$/CNY(HK) futures is the most active class of contracts, especially on days when RMB rates significantly fluctuate.
RMB has become one of the three largest international trade currencies, leading to large exchange rate volatility, followed by the expected increase in demand for hedging RMB currency risk. Therefore, RMB futures transaction volumes often set new record high.
The currency risk of RMB is affected by the following key factors:
1. RMB exchange policy formed by Mainland financial regulators;
2. RMB is not yet a fully convertible international currency;
3. The CNH and CNY rates of RMB are still separately quoted.
Hong Kong citizens hold RMB more than other foreign currency in amount, so exchange rate fluctuations change the dollar worth of the RMB deposit, which can be stabilized by using RMB futures.
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HKEx will introduce RMB options on 20 March 2017. The option contract value is the same as the US$/CNY(HK) futures, US$100,000.
RMB options, compared with RMB futures, have lower market risk, and the maximum loss of holding option contracts is limited to option premium. Long option position can be considered if there is hedging need with risk concerns.
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