Asset Benchmark Research Bank of Communications
Treasury in Practice

Doing business can be fraught with risks and even more so in emerging markets where opportunities abound. FX volatility is foremost among the concerns of CFOs and treasurers in the region in view of the divergent policies of the central banks and other factors such as fluctuating commodity prices and a stronger US dollar.

In Asia, much of the focus on FX volatility during the past year was on the renminbi following the surprise devaluation of the currency on August 11 2015 amid Beijing’s shift to a more flexible exchange rate regime. In an unexpected move, China’s central bank, the People’s Bank of China (PBoC), abolished the way it had fixed the renminbi exchange rate for years, moving to a more market-oriented scheme that takes cues from movements in many other currencies. The immediate aftermath in the form of a near 2% devaluation within just one day (and an additional 2% in the weeks that followed) rattled corporates, irrespective of how market-oriented the decision was.