Central bank to increase currency’s trading day by seven hours, opening it to more foreign investors
l bank to increase currency’s trading day by seven hours, opening it to more foreign investors
China’s currency will gain more trading time as of Jan. 4, the central bank said. ENLARGE
China’s currency will gain more trading time as of Jan. 4, the central bank said. PHOTO: © STRINGER SHANGHAI / REUTERS/REUTERS
By LINGLING WEI
Updated Dec. 23, 2015 6:25 a.m. ET
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BEIJING—China’s central bank said it would extend the yuan’s trading hours in the mainland market starting next month, in a much-anticipated move aimed at increasing the Chinese currency’s global appeal.
In an announcement Wednesday, the People’s Bank of China said that beginning Jan. 4, the hours for buying and selling the yuan on the mainland will be extended to 11:30 p.m. local time, from the current 4:30 p.m. The longer trading hours are in keeping with the government’s efforts to make the yuan’s exchange rate more market-oriented and to further open China’s markets to foreign investors, according to the statement.
Most of the world’s major currencies trade 24 hours a day and move up and down based on market demand. By comparison, Beijing keeps the yuan on a tight leash, with its value largely guided by the central bank and its trading restricted within a band.
In recent years, China has gradually allowed greater flexibility in the yuan’s trading. Earlier this month, the Chinese central bank also renewed its pledge to ease the yuan’s de facto peg to the dollar and instead measure the yuan’s value against a basket of currencies including the dollar, euro, yen and 10 others.
The move to extend the trading hours came after the International Monetary Fund decided in late November to add the yuan to its highly selective basket of reserve currencies, which also includes the dollar, euro, yen and the British pound.
Officials at China’s central bank have said the reserve-currency status could lead to greater foreign demand for the yuan. Extending the trading hours could help bring in more participants in yuan markets, the central bank said Wednesday.
It also said it would permit more foreign investors to trade in the mainland yuan market currently dominated by Chinese banks.
Longer trading hours could also help narrow the gap between the onshore yuan—the version traded within the mainland—and the yuan traded in what’s known as Hong Kong’s offshore market, the central bank said.