A recent decline in the value of the yuan is sparking fears among businesses and wealthy clients at private banks that invested in derivative products betting on the currency’s appreciation, The Wall Street Journal reported. The most popular among the products is the “target redemption forward.” It’s a leveraged bet that pays out every month that the currency rises but losses mount quickly when the yuan falls. Banks have sold an estimated US$350 billion of these products since early 2013. On Tuesday, the dollar hit 6.1115 against the so-called offshore yuan, up sharply from 6.0984 yuan the day before.
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