Why foreign investors face an FX headache in China
Foreign investors face limitations on hedging and lending against their renminbi holdings at a time when their renminbi holdings are growing and the Chinese currency has depreciated.
Foreign investors in China face a growing currency headache as the proportion of their exposure to Chinese securities increases, according to some industry experts.
In particular, there are practical concerns about liquidity and hedging of the Chinese currency between onshore renminbi (CNY) and offshore renminbi (CNH).
In a report on Wednesday, Natixis illustrated how bond and equity markets were behind a sharp rise in non-resident renminbi holdings, partly fuelled by the inclus…
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