Global Markets Brace for Yuan Big Bang When China Holidays End.

Investors are seeking cheap hedges against potential losses in China's yuan as the country's economy prepares to resume after the Lunar New Year holiday. Options have become a cost-effective means of protection against a larger-than-expected depreciation of the yuan, with implied volatility at its lowest levels since 2022. Experts recommend taking advantage of the low prices and buying three-month USD/CNH risk reversals as a hedge against depreciation. The yuan's low volatility is largely due to the People's Bank of China's fixing, which has remained stable in recent months. US data indicating persistent price pressure has also increased the likelihood of a weaker yuan. [Extracted from the article]