China Says Banks Need to Prepare for Yuan Fluctuation – Rob Delaney

From Bloomberg:

China’s bank regulator called on the country’s lenders to prepare for currency fluctuations, a day after Central Bank Governor Zhou Xiaochuan said more flexibility will be introduced.

The government’s plan to liberalize the foreign exchange market “heightens the need for more products by banks and corporations to hedge their currency risks,” Liu said in Singapore yesterday at a seminar organized by the Institute of International Finance.

China wants banks to learn how to use derivative products that have been introduced to help manage risk. Zhou on Sept. 16 stepped up pressure for lenders to prepare for currency changes, warning that otherwise they’d “move too slowly.” [Full Text]

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