Chinese Yuan Becomes More Popular As FX Risk Hedging Tool: Herald

More global asset management institutions and sovereign wealth funds are using the Chinese yuan to hedge against the risk of falling exchange rates of other countries and are actively increasing yuan assets, the 21st Century Business Herald reports. The yuan has continued to rise against a basket of currencies this year amid China's robust trade and steady economic growth, with the latest CFETS RMB index rising to 101.08, the highest level since Dec. 2015. The more than 6% rise in the CFETS is also encouraging more domestic and foreign companies to use the yuan for settlement in cross-border trade and investment, the newspaper said. Although the rising CFETS was partly due to the adjustment of lowering the weight of the U.S. dollar to 0.1879 from 0.2159 last year, strong exports and the large trade surplus are playing the leading role in driving up the index, even amid the sharp dollar rebound due to rising expectation of the Fed's QE taper, the newspaper added.