Yuan Gains Seen Fading With Drop to 7 Per Dollar on Horizon

Chinese one-hundred yuan banknotes are arranged for a photograph in Hong Kong, China, on Thursday, April 23, 2020. Photo: Bloomberg

(Bloomberg) — The yuan’s biggest weekly gain in two years could be fleeting, with some analysts forecasting its slide to the 7 per dollar level.

Option traders are reviving bearish wagers on the Chinese currency as indicated by the three-month dollar-offshore yuan risk reversal, which advanced this week for the first time since mid-May. The cost of shorting the yuan also remains low as offshore yuan tomorrow-next forward points hover around the lowest since January.