Earlier this month the People’s Bank
of China (PBOC) changed the way it calculates the daily fixing
rate of the yuan (CNY) against the US dollar. Corporates must
now better manage their currency risk.
The PBOC’s change resulted a 3.1%
devaluation in the week commencing August 11. That decrease was
larger than expected, according to an August 17
Moody’s report. It means that corporates
– particularly those borrowing in dollars with
CNY-denominated revenues – must be prepared for
increasing currency risk.
Market participants are concerned that more volatility could
be ahead, while others are already planning to take advantage