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Published on Gold Anti-Trust Action Committee (http://gata.org)

Tumbling Chinese yuan sets off 'carry trade' rout, triggers derivatives contracts

By cpowell
Created 2014-03-21 02:07

By Ambrose Evans-Pritchard
The Telegraph, London
Thursday, March 20, 2014

China's yuan has suffered its biggest one-week fall in 20 years, nearing key trigger levels that threaten a wave of forced selling and mounting stress for those with dollar debts.

The jitters come amid reports of fire sales of Hong Kong property by Chinese investors desperate to raise cash, some slashing their prices by 20 percent for a quick sale. A liquidity squeeze in mainland China has already led to the collapse of Zhejiang Xingrun real estate this week with $570 million of debts, the biggest property failure so far.

The yuan weakened sharply on Thursday to 6.23 against the dollar and has now lost 3 percent since January, a clear break with China's longstanding policy of slow appreciation.

Geoffrey Kendrick, from Morgan Stanley, said the currency has broken through the 6.20 level, where a cluster of structured products are triggered. These are known as losses on target redemption funds. The losses have already hit $3.5 billion. ...

... For the full story:

http://www.telegraph.co.uk/finance/china-business/10712339/Tumbling-Chin... [1]



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