China considers longer trading hours for onshore yuan: Sources

BEIJING: China is considering extending its onshore currency trading hours, according to four sources familiar with the matter, a move that could spur demand for the yuan from global investors.

The central bank has surveyed some major market players and sought feedback on lengthening the daily session until 3am Beijing time, according to the sources.

"Covering global trading hours is part of the International Monetary Fund's (IMF) requirements for Special Drawing Rights (SDR) basket currencies," said one of the sources, who declined to be named as he is not authorised to speak to the media.

Extending trade until the small hours, if it occurred, would cover much of the European and US trading day. It could allow overseas investors to hedge their currency risk more closely and, incrementally, expand the yuan's global utility.

The IMF increased the weighting of the Chinese yuan in its SDR basket last month, the first review since the yuan joined the basket of currencies in 2016 in what was a milestone in Beijing's efforts to internationalise its currency.

The State Administration of Foreign Exchange (SAFE) will "steadily push forward with various market infrastructures, including extending trading hours, based on market demand," the FX regulator said in a statement to Reuters.

Earlier in the month, an official from the central bank had said that there were plans to extend interbank trading hours, without elaborating. Details of the proposal were first reported by Bloomberg.

"A longer night session for currency trading can give market participants more flexibility, and thus incentivise more global usage of the RMB," analysts at HSBC said in a note earlier this month.

"Moreover, an increase of the CNY trading volume outside regular Asia hours may provide more guidance on CNH trades and narrow the onshore-offshore spread."

Yuan trading sessions now run from 9.30am to 11.30pm.