CME Renminbi futures

Discussion in 'Forex' started by verynewboy, Jun 20, 2006.

  1. Is anyone planning on trading the new Renminbi futures on the CME?

    Here's the email I got from the CME:

    On Monday, June 19, 2006, CME announced today its plans to list new futures contracts and options on futures on the Chinese Renminbi against the U.S. dollar, Euro and Japanese yen. The new contracts, CME Chinese Renminbi futures contract, CME Chinese Renminbi/Euro futures contract and CME Chinese Renminbi/Japanese Yen futures contract, as well as options on these futures, will trade exclusively on the CME Globex® electronic trading platform and are currently scheduled to begin trading on Sunday, August 27, 2006, for the trade date of Monday, August 28.

    CME foreign exchange (FX) markets reflect notional value of more than $60 billion a day, making CME the largest global FX marketplace outside the interbank market. These new Renminbi contracts will lead to increased market participation by current CME FX customers as well as introduce CME FX markets to new market participants.

    For more information on CME Chinese Renminbi futures and options, please visit
  2. I'll trade it if there is enough liquidity. If it is like the russian ruble, who would want to trade it?
    This thing is going to be volatile and is going to be a great trading vehcile.
  3. It RMB should not be volatile (at least against the USD) because the Chinese government "manages" the currency value through narrow trading bands.
  4. Yes, I was thinking it should be generally quite stable. However, one wrong word from a gov official and I'll be f***ed.

    The liquidity thing will be interesting to see. I've only been trading for 2 years, and all the new product releases have been total failures.

  5. When i look on the bloomberg, it seem it trends pretty well in the forward markets. Is enough to make money if the thing is volatile within the band.
  6. I'll also trade once there's liquidity -- great carry trade currency?

    Anyone know where to trade the spot?
  7. my feeling is that all countries which maintain a fixed exchange rate will have their currencies crashed soros style. Pay some attention to renminbi futures, one day itll get crashed by a bunch of hedge funds and when it does, i dont want to be on the other side of the contract :p
  8. But why would it crash? Of course I agree there's risk in the CNY, but it seems like a banking collapse in China would bring it on.

    Another scenario could potentially be a dive in US household consumption leading to a hard landing for the US economy which then spreads to US consumer-dependent economies (read China), causing more pain abroad than here. Even before interest rates had time to be slashed overseas (and here), the USD could actually surge in a flight-to-quality investment flow similar to what we saw a few months ago, and Asian currencies could be hit hard, especially in USD crosses. That said, Beijing recently asserted that in the event of a financial meltdown it would use its awesome USD reserves as massive stimulus. Gets complicated here ... if anyone has comments on this kind of scenario I'd love to see them...

    In the absence of something worse than a mild recession, CNY would seem to want to appreciate for political, economic and speculative reasons.

    Politically, China will remain under pressure from overseas net consumer markets (US, EU) to allow Yuan appreciation.

    Economically, from a Chinese viewpoint, China should want to allow strengthening of CNY both to spur domestic consumer demand and to help -- as is also the desire of the consumer nations -- to help rebalance the global economy, thereby lessening the risk of a serious problem later on (which could have dramatic and even existential consequences for the Communist Party). You know, The Big One...

    And where speculation is concerned, one would think that for the above reasons, and because China is the preeminent growth story of the new century, investment flows should be strongly CNY positive, and speculative FX flows should also remain net CNY long, both as China keeps rates higher on average than most other economies, as Chinese growth surges, and as domestic Chinese consumption grows. Eventually I'd like to think that we will move closer to purchasing price parity.

    One interesting notion is that Beijing may like to see the Yuan and the Hong Kong Dollar reach parity and then be fused into one. If this is right, a good trade would CNY long and HKD short, except that Hong Kong has a whopping 6.75% central bank rate compared to China's 5.85%.

    Anyway, anyone know how to trade Yuan in the interbank markets without a million bucks?