DGCX to begin yuan trading

Dubai Gold and Commodities Exchange is to open trading in yuan currency futures, priced in dollars, from next month.

The Dubai Gold and Commodities Exchange will open a trade in yuan currency futures, priced in US dollars, from next month.

That makes the UAE the second Gulf state to host yuan trading. The Qatar Central Bank and the People’s Bank of China signed a deal in April to allow Qatari authorities to operate a yuan clearing house.

“The [dollar-yuan] futures contract will serve to address the growing needs for offshore currency risk management tools, such as hedging for trade financing flows and yuan deposits, risk overlay and hedging for foreign fund managers,” the DGCX said.

China is now the UAE’s largest trading partner, having overtaken India this year.

China is seeking to add the yuan to the global basket of reserve currencies, used by the IMF to fund bailouts and underwrite the finances of states.

With the Chinese central bank fond of regularly intervening in the value of the yuan, the IMF has previously questioned whether the currency is sufficiently freely exchangeable to be used as a global reserve currency.

But after China devalued the yuan significantly in August, and promised to refrain from setting the price of the currency on a daily basis, the IMF decided that the yuan was now sufficiently “freely usable”.

The IMF will decide whether to include the yuan in its global reserves on Monday. ​

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