China begins OTC Trading in Yuan

In a move that is sure to turn a few heads, China will soon allow over-the-counter trading in its Yuan currency. In addition, several domestic banks and a few foreign banks have been awarded market-maker status in the new system, which legally enables them to buy and sell Yuan to market participants. Previously, only large financial institutions were permitted to trade the Yuan, via the interbank market. While the Yuan
will still be prevented from fluctuating by more than .3% per day, critics of China’s fixed currency regime have hailed the move as a step towards a floating currency. The Financial Express reports:

Effective from Jan. 4, the central bank would authorise the China Foreign Exchange Trade System to announce the central parity of the yuan exchange rate against the dollar, the euro, the Japanese yen and HK dollar at 0115 GMT each day.

Read More: China to kickstart yuan OTC trade, market-maker system