BackChina plans to allow use of foreign currencies for oil trading
The oil contract will be the nation's first futures product available to foreigners, the State Administration of Foreign Exchange said
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Shanghai: China will let overseas investors trade its domestic crude futures using the yuan or foreign currencies as it seeks greater influence over prices.
The oil contract will be the nation’s first futures product available to foreigners, the State Administration of Foreign Exchange said on its website on Friday. Overseas participants can open foreign-exchange settlement accounts used solely for crude trading at designated banks, it said.
China, the world’s largest consumer of commodities from energy to grains and metals, is pushing for benchmarks in Asia to gain more control over raw-material prices. The nation was the world’s biggest oil importer in June, reclaiming its status from the US as it filled strategic petroleum reserves.
“This is a key regulation that can make possible trading by foreign investors," Li Zhoulei, an analyst at Everbright Futures Co. in Shanghai, said by phone. “The crude oil contract is a landmark that will make China’s futures market and the yuan more internationalized."
The Shanghai International Energy Exchange will start yuan- denominated crude futures in the city’s free-trade zone this year, Lu Feng, an official at the bourse, said at a conference in May. The contract will trade in 100-barrel lots, with crude of 32 degrees American Petroleum Institute gravity and 1.5% sulfur content, he said. Bloomberg
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