After a long-standing one-way climb, the yuan reversed its path in 2014. This was followed by a surprise devaluation by the People’s Bank of China (PBoC) in 2015. This year, the CNYUSD rate continues its gradual descent, especially in anticipation of Trump’s promise for a more hawkish Federal Reserve.
For Asia’s HNWIs, a multitude of dynamics are in play for offsetting yuan weakness. Be it yuan-based Chinese investors with dry powder to spare or neighbouring wealth betting on growth but blindsided by FX risk, discussions to make up for lost yuan grounds warrants attention.
This year, the renminbi was very much to being a subject of the yield conversation. But major central banks’ pressure on rates, according to Joseph Chan, Crédit Agricole’s head of retail and private bank sales, Asia, has caused previously attractive structures like principal guaranteed digital notes to fall out of fashion. “Instead, clients are focusing on flow solutions such as option writing or swaps,” Chan explains.
Naturally, heightened uncertainty creates divergences among investors. Choppy weakening against the USD was followed by a recent rebound, which included three-month, single-day highs on the CFETS RMB Index, a benchmark which tracks the yuan against 13 other currencies.
For private banks in Asia, a solutions provider that can deliver regardless of direction is key to a region where client-directed trading can create wide disparities in positions. Chan highlights that a dedicated sales team for private banks is a key driver in helping Crédit Agricole transact on divergent house views.
For its ability to offer flexible solutions and express views from multiple perspectives, the industry has chosen Crédit Agricole as this year’s Best Provider of RMB-linked Structured Products.