Margin Requirements Double on Yuan Currency Trades; China Recap

As volatility increases, so do margin costs. Consider this image of an email from FXCM forwarded by reader Jacob.

click on image for sharper view

The margin on Yuan (CNH) on Forex has doubled from $50 to $100, the most of any currency pair. The Hong Kong Dollar (HKD) also trades at $100 margin.

For comparison purposes, margin on euros is $26. Margin on Swiss Francs (CHF) is $97.50, no doubt reflecting the surprise peg drop by the Swiss central bank.

Here is the Complete List mentioned in the above image.

FXCM wants to be prepared in case of another sudden Yuan devaluation.

China Recap

• Another 2% Yuan Devaluation Coming Up? What Are the Risks? Explaining Chinese Capital Flight

• China’s Use of Derivatives to Hide Capital Flight Comes Unglued; Reserves Fall by Record Amount; “Worthless” Certificates of Confiscation

• Bill Gross on China, Secular Stagnation, and the Highly Leveraged “Negative Carry” Environment

• China’s Insolvable Problems; Watched Pot Thesis; Roll the Dice

• Chinese Markets Halted in 14 Minutes 17 Seconds, Equities Plunge Another 7.32%

Mike “Mish” Shedlock