China Said to Plan Extending Yuan Trading Hours by November-End

  • Onshore session seen closing at 11:30 p.m. in Shanghai
  • Move to benefit yuan's push for IMF status, says StanChart

China is planning to double the onshore yuan’s trading hours to keep the market open during the European day as it pushes for the currency to be granted reserve status at the IMF, according to people familiar with the matter.

Trading in Shanghai will close at 11:30 p.m. local time instead of 4:30 p.m., according to the people, who asked not to be identified because the deliberations haven’t been made public. The China Foreign Exchange Trade System will make the change by the end of November, they added.

The extension will support China’s push to have the yuan added to the International Monetary Fund’s Special Drawing Rights basket of reserve currencies at a review next month. SDRs are currently made up of the greenback, euro, yen and British pound and their value is calculated daily in dollars using midday exchanges rates in London, shows a posting on the Washington-based lender’s website. The IMF said in August that a market-based representative yuan rate would be needed for the currency’s inclusion.

“This move makes it more convenient for global investors to trade the yuan and will attract more capital to the onshore foreign-exchange market in the long term,” said Liu Jian, a Shanghai-based researcher specializing in cross-border capital flows at Bank of Communications Co. "It’ll benefit China’s push to make the yuan an official reserve currency and its aim is to make the currency more internationalized."

Global Push

China plans to issue yuan-denominated sovereign bonds in London for the first time as it seeks a greater role for its currency in global trade and finance, according to people familiar with the matter. The sale would be the first offshore issuance of the notes outside of Hong Kong and is expected to take place after the PBOC sells one-year bills in the U.K. capital, said the people.

The planned sale comes before President Xi Jinping pays his first state visit to the U.K. during the Oct. 19-23 period. The Ministry of Finance didn’t respond to a faxed request seeking comment on the proposed debt issuance in London. The PBOC, which oversees CFETS, didn’t immediately respond to a faxed request for comment on the plans to extend the yuan’s trading hours. Reuters reported the plans earlier Wednesday.

The potential extension of trading hours is “very positive for the offshore market as it provides stability with a clearer reference from onshore,” said Robert Minikin, head of Asia FX strategy at Standard Chartered Plc. in London. The move is "desirable for" China’s bid for reserve-currency status as it means a more complete market for investors, he said.

For more, read this QuickTake: The People’s Currency

— With assistance by Tian Chen, Ran Li, Heng Xie, Fion Li, and Steven Yang

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