YuanAir car­ri­ersstill in play beat­ing­for SDRthe in­clu­sionoil slump

China Daily (Canada) - - FRONT PAGE -

Becky Liu, a Stan­dard Char­tered Plc strate­gist, said: “It shows that the fund is pre­par­ing fuel for hedg­ingthe pos­si­bil­i­tyin 2008. that the yuan “(Chi­ne­sewill be air­lines) in­cluded haven’tin the SDR hedged this for timea around”.long time af­ter they In a suf­fere­dreport re­leaseda big loss on dur­ingTues­day, the 2008-09the IMF fi­nan­cial­said at the cri­sis, time andof the they’ve­last re­view­been veryin 2010, re­strainedChina met since,” the said gate­way Ge­of­frey ex­port Cheng, cri­te­rion, a Hong mean­ing Kong-basedthe use an­a­lystof yuan, at in BO­COM in­ter­na­tional In­ter­na­tion­al­trade, but Hold­ings­the cur­ren­cyCo. was not in­cluded in the “As SDRa re­sult, bas­ket they’reas it was ben­e­fit­ing­not judged now.” to be freely us­able, the sec­ond AirAsia cur­ren­cyBhd, South­east se­lec­tion Asia’scri­te­rion. big­gest bud­get car­rier, and its AirAsi­aThe re­portX Bhd said unit that have across gonea range com­plete­lyof in­di­ca­tors, un­hedged the for yuan 2016,is now ac­cord­ing ex­hibit­ingto groupa sig­nif­i­can­tCEO Tony de­gree Fer­nan­des.of About in­ter­na­tional50 per­cent use of and AirAsia’s trad­ing. fuel needs for this year are The hedged.IMF of­fi­cial Ti­wari said the “Nice yuan to is wakethe only up cur­ren­cyand see not Brent cur­rently­be­low $50,”in the Fer­nan­desSDR bas­ket tweet­edthat meet­son Tues­day.the ex­port “That’s cri­te­rion. a mag­i­cal There­fore, num­ber a for key us fo­cusin theof the air­line cur­rent busi­ness.” re­view will be whetherSome Asianthe yuan air­lines,also meets how­ever, the freely have us­able con­tin­ued cri­te­rion hedg­ing,in or­der de­spiteto be the in­cluded de­cline in in fu­elthe SDR prices. bas­ket.

His­tor­i­cally,Sin­ga­pore Air­lines de­ci­sions Ltd,that have South­east changed Asia’s the big­gest val­u­a­tion car­rier, meth­od­said last have month been that tak­en­its sav­ingswith a from70 per­cent­lower fuel ma­jor­ity.prices were par­tially Eswar off­set Prasad,by hedginga pro­fes­sor loss­esof trade­and a pol­icy strongerat Cor­nel­lUS dol­lar Uni­ver­si­tyin the quar­terand a that se­nior ended fel­low in at June.the Brook­ingsBe­fore hedg­ing, In­sti­tu­tion, Sin­ga­pore said Air’sthe IMF’sfuel costs re­view dropped in­di­cates33 per­cent­that China be­cause ha­sof lower made prices. sig­nif­i­cant pro­gress­With al­moston meet­ing60 per­centthe “freely of its us­able”fuel re­quire­mentscri­te­rion for for the the yuan quar­terto be hedged in­clude­dat an in av­er­age theSDR of bas­ket$110 per but bar­rel,that morethe car­rier progress lost is S$263 needed. mil­lion ($191 mil­lion) on its “The hedges. de­ci­sion about the yuan’s Sin­ga­pore in­clu­sion Air in said the bas­ketit had hinges hedged 55 on per­cent re­forms of its such­jet fu­e­las greater­needs for ex­changethe July-Septem­ber­rate flex­i­bil­ity, quar­ter more at in­vestoran av­er­age ac­cess price to of on­shore$104 a bar­rel. for­eign ex­change and se­cu­ri­ties mar­kets, and avail­abil­ity of a wider range of gov­ern­ment debt se­cu­ri­ties,” said Prasad, a for­mer IMF China di­vi­sion chief.

He said IMF staff have also sig­naled that the yuan’s in­clu­sion in the SDR bas­ket will ul­ti­mately be am­at­ter of judg­ment by the IMF ex­ec­u­tive board since the de­ci­sion falls right at the mar­gin. Con­tact the writ­ers at chen­jia1@chi­nadaily.com.cn and chen­wei­hua @chi­nadaily.com.cn

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