Traders are More Bearish on Yuan Than They Are on Argentine Peso
- Hedging cost on China's currency among most expensive globally
- One-month yuan forwards fall to near four-year low on Monday
Market Rout Deals Emerging Assets a Violent Blow
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In a sign of just how distressed the Chinese market has become, traders are more bearish on the yuan than they are on the currency of Argentina, a country which suffers from a bond default, a stagnant economy and the second-highest inflation in the world.
Costs to protect against further declines in the yuan, as measured by one-month implied yields on so-called non-deliverable forwards, rose to a high of 18 percent on an annualized basis on Monday, up from 2 percent at the end of July. That was the second-most expensive hedge among 31 major currencies tracked by Bloomberg after the Peruvian sol, surpassing those of the Argentine peso, Brazilian real and the Russian ruble.