A great way to hedge against weakening China`s YUAN.

出没在交易圈的情报员
2022-04-22

Foreign exchange futures has come,  and they are very, very useful USD/RMB futures

$Mini HKEX USD/CNH - main 2205(MCNHmain)$

If you have been involved in foreign exchange trading for a long time, you will not be unfamiliar with the currency pair between US dollar and YUAN. Due to some well-known reasons, the US dollar has risen recently, while the YUAN exchange rate has fallen.

The trend of the dollar/yuan exchange rate is as follows:

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​You will find that the US dollar index and the futures trend of US dollar against YUAN are the same, and they are all rising. Do you feel strange?

In fact, it is not surprising that with the value of US dollars is increasing, One dollar can be exchanged for more yuan, while the USD/RMB futures will continue to rise,.which means the YUAN  is getting weaker.

​The basis of foreign exchange trading, you can review my last post: How to understand foreign exchange market and exchange rate futures?​

After reading the above basic knowledge, we need to pay attention to the question of what currency the futures price is expressed in. The Japanese yen futures and Australian dollar futures we talked about before actually express their prices in US dollars, so their full names are Japanese yen/US dollar futures , and the price means how many US dollars can be exchanged for 1 yen.

Now talking about YUAN futures, the full name is USD/yuan futures, and the price is expressed in RMB. Therefore, the meaning of the contract is to stipulate that at a certain time in the future, the exchange rate of the contract price (for example, 6.45 RMB to 1 US dollar in the figure) will be exchanged for 100,000 US dollars. If the exchange rate of RMB rises, less RMB will be used at the maturity time, so in the contract, if you look long at RMB, you need to short the futures of USD against RMB.

Isn't it simple?

Let's take a look at some key points of this new small US dollar/yuan futures contract.

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The most convenient point of this small RMB futures contract is that it lowers the threshold of RMB futures participation, leaves a lot of room for available funds, reduces leverage in disguise, and at the same time reduces the fluctuation of one jump, which is only two yuan, so it is very suitable for players with small amount of funds.

The contract scale of 20,000 US dollars and the margin of about 2,000 RMB are nearly one-fifth of the original big contract. It is more convenient to hedge against exchange rate fluctuations.

$NQ100指数主连 2206(NQmain)$$黄金主连 2206(GCmain)$$日元主连 2206(JPYmain)$


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Comments

  • Kurt Huber
    2022-04-23
    Kurt Huber
    Jason Connor on💯 face'book is extremely knowledgeable and skillful in the Crpyto mining, It's a massive profits withdrawal for me today.
  • ElvisMarner
    2022-04-22
    ElvisMarner
    Forex trading is a bit risky, which is not suitable for ordinary people.
  • LouisLowell
    2022-04-22
    LouisLowell
    It can only be said that the dollar is too strong.
  • Gneiss
    2022-04-23
    Gneiss
    Things will get better soon
  • Toby_Chua
    2022-04-23
    Toby_Chua
    Good for the world to erode dollar hegemony
  • JunioR
    2022-04-23
    JunioR
    Strengthen the square
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