, Columnist
The Yuan's Expensive Option
The yuan's decline has prompted a rush to hedge currency risk, pushing up costs.
This article is for subscribers only.
China's capitalists are getting a lesson in the law of supply and demand. As they scramble to hedge exposure to dollars following the yuan's devaluation, chief financial officers from Shanghai to Shenzhen are finding the costs have gone up.
For some, the price has been too high. Modern Land China hasn’t used swap markets to protect against currency risks because of the expense, Faye Fang, a Hong Kong-based investor relations officer at the Beijing-based developer, told Bloomberg News. The yuan has depreciated about 4.2 percent against the dollar and 6.5 percent against the euro in the past 12 months. With China's currency no longer seen as a one-way bet on appreciation, there's been a rush to protect against further declines.