The USD/CNY forex swaps are slightly lower following the Chinese central bank's move to inject liquidity into the money market Thursday, says a Shanghai-based trader at a foreign bank. One-year USD/CNY forex swaps are trading at a premium of 400 pips from a 406.75 pip premium late Wednesday in Asia. "The premium may go up again as market players don't seem to be impressed with the central bank's reverse repo today, plus expectations of a cut in banks' reserve requirement ratio are still high," he says. "So unless a RRR cut takes place, we're likely to see the premium heading north again." The USD/CNY spot is at 6.3525, down from 6.3477 Wednesday in Asia. Offshore, one-year USD/CNY NDFs are at 6.3990/6.4020 vs 6.3960/6.4070 late Wednesday.
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Swap is a forex investing term and it implies a real-time buy and sale of the same volume of a picked currency for two various dates for the sale and acquire of another picked currency.
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