Renminbi liberalisation reduces demand for NDFs
The non-deliverable forward was once a mainstay of the RMB market but as the offshore sector continues to develop, greater liquidity and client demand means that more complex structures are finding favour
As part of the maturation and continued liberalisation of China's currency, the offshore deliverable renminbi market has eclipsed the size of the non-deliverable forward (NDF) market, with a larger number of corporates and other market participants now using deliverable forwards to hedge their RMB exposure instead of NDFs. This is due to an increase in liquidity in the deliverable RMB market as a result of more trade settlement flows in and out of China.
The CNH market or offshore pool of
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