The document discusses the low premiums in USDCNH compared to potential returns if USDCNH rises, with an implied volatility of approximately 3%. It highlights the complacency and positioning among FX and FX options participants in USDCNH. The document includes historical data on USD-CNH cross rates and Shanghai interbank offered rate fixing (SHIF1M Index) from 2009 to 2014. It also mentions the People's Bank of China's efforts to tighten money market rates to curb shadow banking and asset speculation. Concerns about bad loans in China's shadow banking industry and the rapid growth of high-risk shadow banking products in China's trust industry are also noted.
documents/vol00010-efta01461322-pdf.pdf
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