Demand For FX Derivatives Jumps As Central Banks Prep Rate Rises- CME Group.

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Demand for currency derivatives has shot up this year, data from CME Group showed; in a sign investors are positioning for hefty interest rate hikes from the U.S. Federal Reserve and other big central banks.

“Open interest” — the number of outstanding futures and options — was at $272.5 billion at the end of July; up 8.8% year-on-year, according to CME, the world’s largest financial derivatives exchange.

Large open interest positions reached a record high of 1,312 contracts in May, easing to 1,192 in July, CME said in a release seen by Reuters.

The rise was attributed to financial markets bracing for aggressive monetary tightening as central banks try to curb the biggest inflation surge in decades, the Chicago-based CME said.

May’s open interest surge came just ahead of the Fed’s 75 basis points (bps) interest rate rise in June.


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