New Delhi: Leading index provider Standard and Poor’s (S&P) announced the launch of currency indices—the Indian rupee index and Chinese renminbi (another term for yuan) index—which will provide global investors an exposure to the two emerging economic giants.
S&P launched the two indices on Wednesday, the first in a series of real-time currency indices to be launched in 2008, a company release said.
“China and India are both important markets in global trade, but currently lack a liquid and accessible currency futures market,” S&P managing director and chairman of the index committee David Blitzer said.
Launch of the two new indices would provide investors with access to the currencies of the two emerging economic superpowers, while also serving as a reliable and relative benchmark for currency performance, Blitzer added.
The S&P Indian rupee index and Chinese renminbi index are designed to replicate the performance of the rupee and the renminbi versus the dollar.
The indices represent the performance of a rolling investment in three-month, non-deliverable forward currency contracts.
The two indices are rebalanced every three months on the valuation date of the previous three-month contract. The indices have an excess return version, which reflect changes in forward prices, as well as a total return version that adds a risk-free rate to the excess return index.
Both emerging markets do not have liquid currency futures, so S&P has launched the indices by using non-deliverable forward contracts. These indices would provide information on the currencies and the costs of hedging positions in a convenient and consistent form, the release said.
This would be the first ever way for the US retail investors to get access to the two currencies, the release added.