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China Opens Currency Derivatives to Lure Overseas Bond Investors

  • Move is a “significant” market liberalization: Goldman Sachs
  • Overseas investors hold about 1.5 percent of onshore bonds
Photographer: ChinaFotoPress/VCG via Getty Images

China is giving overseas investors access to its foreign-exchange derivatives market to allow hedging of bond positions, in the latest bid to attract inflows.

Foreign institutions that invest in the interbank bond market can trade products including forwards, swaps, cross-currency swaps and options with domestic settlement agents, the State Administration of Foreign Exchange said in a statement posted on its website Monday. Access is limited to the hedging needs of private-sector investors’ onshore bond positions, the regulator said.