RMB fall forces Chinese corporates to rethink hedges

For years, Chinese corporates assumed the renminbi would continue to appreciate, but following a surprise devaluation in August, many are now finding hedging a challenging experience

Unexpected: August's 4% devaluation of the renminbi

For years, corporate treasurers in China had it easy. The renminbi rate, controlled by the central bank, was either pegged or appreciated slowly against the dollar, making foreign exchange management a safe and predictable process – if indeed they bothered at all.

So, when the People's Bank of China (PBoC) unexpectedly devalued the onshore renminbi by 4% against the US dollar over two days in August, many treasurers were caught on the hop. The worst affected were unhedged importers and those