China Allows First Overseas Banks into Forex Market

The Chinese central bank has announced that it has cleared seven foreign financial institutions to enter its interbank foreign exchange market.

The entities include three central banks – the Hong Kong Monetary Authority, the Reserve Bank of Australia, and the National Bank of Hungary. The rest are the International Bank for Reconstruction and Development, International Development Association, Trust Funds of World Bank Group, and Government of Singapore Investment Corp.

"this will contribute to greater openness of the Chinese foreign exchange market."

The state news agency Xinhua said the seven institutions will be allowed to trade in renminbi and other currencies in Forex products including spots, forwards, options, and Swaps on the Chinese domestic market. The agency also quoted the People’s Bank of China as saying that "this will contribute to greater openness of the Chinese foreign exchange market."

Next Monday, the International Monetary Fund is expected to announce that the Chinese currency will join its Special Drawing Rights basket of currencies, which include the US dollar, the pound sterling and the yen. The negotiations between Beijing and the IMF on this have been going on for some time, with the most notable opponents to the move being the UK and the USA.