China Burns Hedge Funds as $562 Million Yuan Bet Turns Worthless
- Options on weaker yuan fail to pay out as PBOC intervenes
- More than $800 million of contracts to lapse in three months
The Economic Case for an Appreciating Yuan
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The battle over the fate of China’s currency is starting to get bloody for the bears.
Seven months after a shock devaluation spurred hedge funds and other speculators to wager on further declines, the yuan’s unexpected resilience has turned many of those bets into losers. At least $562 million of options that pay out if the currency drops below 6.6 per dollar -- its weakest point since the devaluation -- have expired worthless since August. Another $807 million will lapse within three months.