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Trading of SGX USD/CNH futures hits record high of US$10b per day

TRADING activity in Singapore Exchange (SGX) USD/CNH futures spiked to a record high on Monday, with trading volumes surpassing US$10 billion per day for the first time.

As at 6pm on Aug 5, trading volumes of SGX USD/CNH futures came in at US$10.37 billion for the day, a 38 per cent, or US$2.85 billion increase on last Friday's record, following US President Donald Trump's tweet that the US would slap a 10 per cent tariff on yet another US$300 billion of Chinese goods, beginning from September. 

"Trading activity increased immediately after the tweet, sending global FX (forex) markets in a frenzy as participants wanted to manage currency risk," the bourse operator said. 

SGX’s USD/CNH futures saw traded volumes of over US$2.6 billion during US trading hours on Friday morning before the start of trading in Asia, and registered US$7.5 billion in trades for the day on Friday - a record high before Monday's figures came in.

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Prior to Friday, the previous record was set on June 3, 2109 when US$6.45 billion USD/CNH futures traded in a single day, SGX noted. 

KC Lam, SGX's head of FX and rates said: "SGX remains the venue of choice for currency risk management as global market participants continue to manage the impending impact of new tariffs, and increased market volatility across all time zones."

On Monday, the USD/CNH exchange rate went above seven yuan for the first time since 2008.

The Trump administration labelled China a "currency manipulator" after the Chinese central bank allowed the yuan to fall below this key threshold, marking a dramatic escalation in the trade war between the world's two largest economies. 

According to state-run news agency Xinhua, Beijing has also asked Chinese firms to halt purchases of US agricultural goods, in a fresh blow to US farmers and traders, after Mr Trump further ramped up tariffs on Chinese imports. 

Agricultural products, particularly soya beans, have been at the centre of the escalating US-China trade war, with the US insisting that China must make substantial purchases of the crop as part of any trade deal. Before the trade war began, China was the largest importer of US soya beans, buying 25 million to 30 million tonnes a year, according to figures by Financial Times. 

China's central bank on Tuesday set its daily currency fixing stronger than expected, and above seven to the greenback, suggesting that officials may want to slow the depreciation of the yuan. The People's Bank of China set its daily reference rate at 6.9683 per US dollar, compared with an estimated 6.9871 according to the average of forecasts by 19 traders and analysts in a Bloomberg survey.