With an unhedged forex exposure of US$17b, the bank diversifies its offshore assets as yuan strengthens
Bank of China is diversifying its offshore assets away from the falling American dollar and reducing its overall foreign exchange exposure as the yuan continues its inexorable rise, BOC president Li Lihui said.
BOC has the largest unhedged foreign exchange holdings of any Chinese bank - the main reason its Hong Kong and Shanghai-listed shares have underperformed those of its competitors.
'Our foreign exchange client assets and client liabilities are basically balanced and we don't have risks in that area. We face risks mostly in our proprietary assets,' Mr Li said in an interview. 'Now we are diversifying our foreign exchange holdings based on our reading of the market.'
According to BOC's latest interim results, its total unhedged foreign exchange exposure is about US$17 billion.
'Although our exposure will increase every year, we plan to reduce it by converting some foreign currency into yuan and limiting it each year to about US$12 billion,' Mr Li said.