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China Relaxes Rules On Yuan Options

China has relaxed the rules on yuan options.

China has relaxed the rules on yuan options, The Wall Street Journal reports. The new risk-reversal option structure, introduced by the State Administration of Foreign Exchange, will provide banks and businesses more ways to hedge currency risks that have increased due to increasing volatility in the yuan’s value.

The new structure will let investors purchase and sell options simultaneously, whereas under the current rules, investors can buy options only from banks and can sell options only to exit the position established by their earlier option purchase. The new rules do not allow an investor to sell an option beyond the cost of the option being bought.

Click here for the story from The Wall Street Journal.

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