China rate cut creates corporate hedging opportunity
Firms looking to de-risk but the Tarf issue could re-emerge if the renminbi weakens against the dollar
Banks have been fielding calls from clients looking to shore up their renminbi hedging positions, following the decision by the People's Bank of China (PBoC) to cut interest rates on November 21 – the first such move since 2012.
China's central bank decided to reduce the one-year benchmark loan interest rate from 6% to 5.6%, while at the same time it cut the deposit interest rate from 3% to 2.75% and raised the cap on deposit interest rates from 10% to 20% above the benchmark level.
Ivan Wong
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