(Yicai Global) June 9 -- Standard Chartered Bank has become the first foreign bank to sell Chinese yuan-denominated Asian options to two mainland companies, as the UK banking giant bolsters its portfolio with the latest financial products to give its clients a wider range of hedging instruments at a lower cost.

The two clients are logistics equipment provider China International Marine Containers and supply chain service provider Zheshang Development Group, the London-based lender said.

The People’s Bank of China started to allow yuan Asian options to be issued on May 20. With Asian options, also known as average options, the payoff is determined by the average price of an underlying asset over a period of time, unlike European and US options where the payoff depends on the price at maturity.

Asian options reduce the possibility of extreme profit or loss on the expiration date, which is more conducive to neutral hedging and safeguarding value, said Yang Jing, Vice President of Standard Chartered Bank China. In addition, compared to European and US options, Asian options have lower premiums.

Asian options are more suitable for companies with stable forex cash flow to achieve substantial hedging, Yang Liu, general manager of the financial market department at Zheshang Development, told Yicai Global.

Influenced by the US Federal Reserve's tightening monetary policy, the redback’s exchange rate against the US dollar has fluctuated considerably this year. It was on a downward slide for much of April but started to rebound late last month. The onshore yuan exchange rate closed at CNY6.6837 to a dollar today, a drop of 5 percent from the beginning of the year.

The rate is likely to fluctuate between 6.6 to 6.9 as many institutions believe that the Fed will raise interest rates again in June and July and that the greenback will continue to appreciate, Yicai Global has learned.

Editors: Dou Shicong, Kim Taylor