Derivs - FX

With interest rates around the globe plummeting, some market participants are beginning to wonder what would happen if the recipient of payment under a derivative contract is suddenly in the position of owing money.

Royal Bank of Canada is on the lookout for salespeople to sell Asian currency non-deliverable forwards to institutional clients in Asia.

The non-deliverable forward market has reacted to news that the People’s Bank of China will stabilize the yuan against the dollar by pricing in the expectation of lower appreciation compared to last week’s predictions.

Investors were selling EUR/USD at-the-money straddles to exit positions Thursday in a move to balance their books. Liquidity is tight, prompting traders to put on short-maturity trades.

All tenors of USD/CNY non-deliverable forwards are pricing in greater depreciation of the yuan against the U.S. dollar, as the market speculates whether the Peoples’ Bank of China will allow the Chinese currency to weaken so as to stimulate export growth.

Natixis is elimating exotic derivative offerings in Asia in a move that will see two thirds of its 300 capital markets division in the region cut. The measure takes effect immediately.

The non-deliverable forward market is pricing in a severe depreciation in the Indonesia rupiah, with the 12-month USD/IDR NDF trading at 16,000.

Fx players are scooping up U.S. dollar and euro downside puts against the yen, with interest also being shown for double no touch options on the currency.

Hong Kong Legislative Council will begin debate on regulatory reform today, including the possible merger of the Hong Kong Monetary Authority and Hong Kong Securities and Futures Commission.

Standard Chartered is looking to expand its fx options business into Latin America and Eastern Europe.

Barclays Capital is pitching EUR/CHF and USD/CHF call options amid high volatility in the U.S. dollar and euro and ultra low correlation between the Swiss franc and those currencies.

Foreign exchange traders are being forced to scramble for gamma hedging as spot moves wildly in response to the global financial crisis.