FX swap volumes set to rise on China govvies index inclusion
Traders expect greater use of FX derivatives if FTSE Russell adds bonds to the WGBI this week as expected
Traders are expecting Chinese renminbi foreign exchange swap and forward volumes to increase if the country’s bonds are added to a key fixed income index this week.
Concerns about secondary market liquidity, FX execution and settlement have kept Chinese government bonds (CGBs) out of the FTSE Russell World Government Bond Index (WGBI) until now. But with the instruments tipped to make the grade in an annual review on September 24, market participants believe the use of renminbi swaps and
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