Corporates face paper structured forex losses from RMB slide

An intervention by China's central bank causes unrealised corporate hedging losses

Chinese yuan notes

A move by the People’s Bank of China (PBoC) to devalue the renminbi by cutting its reference rate by 1.9% has caught corporates by "surprise" and has already pushed up to 15% of structured forward hedges out-of-the-money, with the market fearing the currency could fall further.

It was only 16 months ago that Taiwanese corporates faced mark-to-market losses to the tune of $150 million on target redemption forwards (Tarfs), after the renminbi depreciated by 3.3% between January and April 2014 – a

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