April A Good Month For China

The inter-bank foreign exchange market in China reached US$1.282 billion in average daily transaction volume or 40% month-on-month growth last April, according to the Xinhua Website’s article entitled China’s Foreign Exchange Trade Surges In April.

The turnover of the four major foreign currencies amounted to US$28.215 billion for the twenty two (22) trading days of April. This totaled US$27 billion in trade for the period and US$91.397 billion for the first four months of 2005. Converted on a daily basis, the daily transaction volume reached US$1.115 billion. The four major currencies are the US Dollar, the Japanese Yen, the Hong Kong dollar, and the Euro.

With an average weighted price of the US Dollar staying stable for the month, the dollar resulted at 8.2765 to a Yuan at the end of the trading period. The weighted price of the Euro, on the other hand, was down by 230% points month-on-month at 10.66688 to a Yuan.

A New Player In China’s ForEx

ABN AMRO recently joined China’s foreign exchange trading market through an agreement with the China Foreign Exchange Trade System (CFETS), a subsidiary of the People’s Bank Of China.
As one of the first international firms to enter China’s forex market, ABN AMRO can now provide competitive executable prices to Clients through CFETS, which provides members real-time, Internet-based foreign exchange multi-bank portal using Reuter’s technology. Members can also leave orders, request a price or execute foreign exchange transactions with a single click of a mouse for any of the non-renminbi currency pairs quoted on the portal.

ABN AMRO, proud of making Chinese financial history in cooperating with CFETS, expects foreign exchange trading volumes at CFETS to increase significantly due to the expansion of onshore foreign exchange trading with very transparent prices and liquidity.

The launch of CFETS and ABN AMRO’s entry in China’s foreign exchange trading market are expected to bring in a wider range of currency pairs to be traded in the system and introduce a market making mechanism to China.

Highlights of ABN AMRO Joins Forex Market, Xinhua website

France On China’s Forex Policy

France is confident that China will reform their exchange rate policy especially after China denied U.S.’ allegations that it is manipulating its currency to enjoy trade surplus. France, through its Bank of France Governor Christian Noyer, also said that the Chinese themselves are convinced of the need to reform their currency policy and on a progressive level.

According to Noyer, the problem with China’s foreign exchange policy is an "Asian phenomenon" and is prevalent in other Asian currencies as an outcome of previous years’ crisis. Asians, in general, are very cautious over the reform of their monetary policy but are aware of the need to reform it in order to establish normal relations between the world’s major currencies.

China’s State Administration of Foreign Exchange Deputy administrator, however, insisted that reforms on their currency policies have no timeframe after the U.S. government issued a six-month deadline for a change in China’s currency policy into a more flexible exchange rate.

Source: Bank Of France’s Noyer Convinced Chinese Will Reform Exchange Rate Policy, AFX News Limited Website