Surprise RMB strengthening prompts unwinds

“A lot of long [US$] positions were unsustainable and had to be re-evaluated,” says forex structuring head

US dollar-offshore renminbi rate fell from 6.87 on May 23 to a low of 6.72 on June 1

A surprise move by China’s central bank to step in and strengthen the local currency has left currency speculators scrambling to unwind their long US dollar positions, and prompted renewed appetite for hedging among the country’s onshore exporters, who previously chose not to protect themselves against a weaker dollar.

The US dollar-offshore renminbi (CNH) rate fell from 6.87 on May 23 to a low of 6.72 on June 1, following Moody’s decision to cut the country’s credit rating. This led to a surge