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CNY Hedging Demand Firms Further as Pressure Builds

CHINA
  • We wrote yesterday of the demand for USD/CNY upside via options, and the pressure clearly remains on the currency – evident in these headlines flagging CNY weakened to approach the 2% trading band from the daily CNY fix.
  • There remains firm demand for CNY hedges today, with the more salient trades including a 7.2325 straddle rolling off at the end of April, as well as large interest in longer-dated USD/CNY 7.0000 put strikes that traded mid-China hours, rolling off at the beginning of July 2025.
  • While today marks the second session of USD/CNY approaching the top-end of the trading band, worth recalling upcoming market holidays may be complicating matters. Bloomberg wrote yesterday that some participants had been blocked from entering into specific CNY swap trades – potentially implying that demand for USD/CNY to trade outside of trading band is building – but the Tomb Sweeping Festival taking place from April 4 – 6 will interrupt market hours for the rest of this week.

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