Chinese and foreign banks have begun trading onshore yuan/dollar options in China on April 1, 2011, Reuters reports. The options’ volatilities were quoted in line with offshore yuan/dollar options.
Bank of China, ICBC and Deutsche Bank have conducted the transactions with one-year onshore yuan/dollar volatilities quoted at 3-3.45% in early trade in line with offshore forwards. The move follows the introduction of new rules by the State Administration of Foreign Exchange allowing the trading of FX options between locally-based banks, institutions and corporations.
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