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First offshore RMB Kilobar Gold launched in HK

2011-10-18 13:56    Ecns.cn     Web Editor: Xu Rui

Hong Kong (CNS) -- The first offshore yuan-denominated gold product was launched by the Chinese Gold and Silver Exchange Society (CGSES) in Hong Kong, on October 17.

Yuan gold contracts totaling 322 kilograms were traded on the first day, with the settlement price set at 346.95 yuan per gram, totaling 111.7 million yuan.

"By attracting both local and international investors, the Renminbi Kilobar Gold is a significant step towards internationalising the renminbi," said Haywood Cheung, president of the 101-year-old bullion exchange.

Investors who choose to convert their renminbi bank deposits into the new gold contracts can gear up their exposure to the currency by as much as 25 times. The ability to use leverage will prove attractive to investors, who until now have lacked opportunities to put their renminbi to work, added Cheung.

He estimated that the initial daily trading volumes will be around 300 kilograms. Within a month, the turnover of the Renminbi Kilobar Gold contracts is expected to account for about 5% to 10% of the exchange's total, and up to 30% during the next six months.

The launch of the Renminbi Kilobar Gold is a response to the proposal by Vice Premier Li Keqiang during his visit to Hong Kong in August to encourage reminbi operation, vitalize the renminbi financing regime, and boost the city's status as an offshore hub for the currency, said Cheung.

The CGSES was founded in 1910 and serves the only gold exchange in Hong Kong.