Traders Pile Into Bearish Yuan Bets to Hedge Downside Risks

Traders have boosted bearish wagers on the yuan to the highest since April, looking to protect against downside risks in the wake of a strong rally and ahead of a period of traditional weakness in the Chinese currency.

So-called risk reversals on the offshore Chinese yuan have kept moving into positive territory over the past couple sessions. That’s a sign that traders are paying much more for call options that bet on a higher dollar-yuan pair over the coming months, than puts that look for the pair to decline over the same period.