Chinese corporate hedging costs soar after PBoC forex clampdown
Chinese corporates looking to hedge following last month's renminbi devaluation face 400bp price hikes because of a new PBoC rule forcing dealers to hold deposits against onshore renminbi-based forex derivatives
Chinese corporates scrambling to cover their US dollar exposures after a surprise devaluation by the country's central bank last month are facing a spike in hedging costs as a result of a new requirement for banks to hold a deposit against foreign exchange derivatives transactions.
The People's Bank of China (PBoC) devalued the renminbi by 1.9% against the dollar on August 11, causing the dollar/renminbi exchange rate to rise by 4% in two days. To minimise speculative trading following the
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