Chinese corporates are looking to take a more proactive approach to foreign exchange hedging following the country’s reopening and the unwinding of its zero-Covid policy.
According to data from China’s State Administration of Foreign Exchange (Safe), FX forwards sales to onshore companies totalled $54 billion in February – a 44% increase since October. Kevin Zhang, head of FX onshore China trading at Standard Chartered Bank, says it has seen an estimated 10–15% increase in client hedging demand compared with last year.
Some dealers say much of this activity is coming from Chinese exporters, who receive dollars and then need to convert them back into renminbi.
“Exporters have natural cashflow hedging needs as the USD is still the main currency in cross-border trades,” says a head of macro sales at a European bank in Hong Kong.
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