Activity in China’s oil futures market has risen to record levels as the country seeks to develop the role of its currency in a trade dominated by the US dollar, reported the Financial Times.
Open interest in oil futures on the Shanghai International Energy Exchange (INE), a measure of the total number of contracts outstanding, leapt to a daily average of 118,249 in 2020 — four times higher than in 2019. Trading volumes climbed more than 20% year on year.
A rise in trading and positions in the contracts, which were launched in 2018, forms part of a longer-term push by Beijing to establish renminbi-denominated markets that ultimately seek to challenge the dollar’s dominance.
The new market “has done well beyond a lot of people’s expectations, including mine”, said Jian Yang, research director at the JPMorgan Center for Commodities at University of Colorado Denver. He added that the market could provide “potentially huge opportunities for promoting global usage” of the renminbi.