Business
Yuan’s Decline Triggers Fears on Leveraged Bets
BEIJING – The sudden slide of the Chinese currency over the last week has raised fears that the yuan is nearing levels that could trigger an unwinding of billions of dollars in highly leveraged bets on the currency’s appreciation.
Traders and strategists say a portion of the yuan’s recent decline can be attributed to investors looking to get out of trades before losses soar.Daily trading volume in the yuan has exploded recently, tripling to $120 billion a day since 2010, when China allowed trading in its tightly controlled currency. The yuan is now the ninth-most traded currency in the world, according to the Bank for International Settlements, rising from 17th two years ago.
In the past year, trading in derivatives tied to the currency have soared as investors bet on a continued rise in the yuan. According to Deutsche Bank, approximately $250 billion worth of these derivative contracts were traded in 2013, the first year these products took off. Already in 2014, between $80 billion and $100 billion have been traded, the bank says.
The currency, which is also known as the renminbi, is up 33% since 2005. And because the currency is tightly controlled by the Chinese government, volatility is among the lowest in Asia, making the bet seem even less risky.
On Tuesday, the offshore yuan hit 6.1115 against the greenback, sharply up from 6.0984 the day before. Earlier in the day, the currency touched an intraday peak of 6.1250, its highest since it reached 6.1272 on Aug. 22 and the yuan’s biggest daily drop since Jan 28, 2011. China’s stock market suffered its biggest fall in five months, dropping 2.1%, putting its overall decline at 3.5% since the beginning of the year.
Individual investors and small- and medium-size businesses were among the biggest buyers of options that would profit from appreciation in the yuan, currency analysts say. They bought structured investment products that magnified gains but could lead to big losses if the yuan fell below certain levels. The rising yuan coupled with higher interest rates inside China led even more investors to buy yuan, pushing the currency higher.Ju Wang, senior Asian currency strategist at HSBC in Hong Kong, said losses on these products were small so far, but if investors believed they would grow significantly if the currency continued to depreciate, “they might take a mark-to-market loss and unwind contracts. So it all depends on expectations.”
Ms. Wang said that small- and medium-size Chinese exporters have been big buyers of derivatives because they allowed them to hedge against the rising yuan, which makes their goods more expensive to sell overseas and their revenues, which come in foreign currencies, smaller. In many cases, Ms. Wang said, the businesses are losing money in their operations but make profits because of the hedges, which generate a monthly income.
Greg Yu, the Asia ex-Japan head of structuring and solutions group at J.P. Morgan in Hong Kong, said wealthy clients of private banks also bought these products, mostly in Hong Kong, the biggest market for trading in the yuan, and Taiwan. Products designed to profit from the rising yuan are widely advertised by banks in Hong Kong, where bank deposits held in yuan are up by 50% in the last 18 months to 900 billion yuan.
The derivatives that underlie these products are based on the so-called offshore yuan, which trades in Hong Kong and isn’t subject to the strict controls on movements by China’s central bank for yuan that trade in the mainland. While the offshore yuan trades freely, it is broadly tied to the yuan price inside China.
The most popular among the derivative products tied to the yuan is the ‘target redemption forward.” The product is a leveraged bet that pays out every month that the currency keeps rising. But when it falls to a specific level, losses begin to mount quickly.Geoff Kendrick, head of foreign exchange and rates at Morgan Stanley, says that these contracts vary widely in value and in length. He estimates that banks have sold these target redemption-forward products with notional value totaling $350 billion since the beginning of 2013.
He says that if you take the $350 billion notional outstanding and assume the average contract has a year left, then once the yuan passes a specific threshold versus the dollar, every decline of 0.1 yuan against the dollar, would cost buyers approximately $500 million a month. That means roughly $6 billion in losses. The contracts are opaque so there is no way to know exactly what price the yuan needs to hit for the losses to begin, but Mr. Kendrick says a reasonable estimate is from 6.15 to 6.35 yuan to the dollar.
Mr. Kendrick says he believes the Chinese currency’s move will be contained but “we do acknowledge the risk of a volatile move higher in the cross, especially given the large amount of structured product traded over the past few years.”
Greg Matwejev, director of FX hedge-fund sales at brokerage firm Newedge Group SA in Hong Kong, said most hedge funds in the region were betting on a stronger yuan as well. “It was like free money,” he said. But the fast move downward forced them to sell quickly. “There is still a lot more pain before this trade shows signs of stabilizing. Very few funds are contrarian on this trade and all are seeing red at the moment,” he said.
He said if the yuan falls further, investors will be forced to sell their yuan and buy U.S. dollars, adding that if the currency moves beyond today’s trading levels of 6.12, it “will set off more panic U.S. dollar buying.”
– WALLSTREET JOURNAL
Sahara Energy Geneva has highlighted the power of business collaboration to deliver lasting impact, with Mercy Ships Cargo Day celebrating more than $20 million raised over the past decade to support healthcare interventions in Africa.
More than 500 guests from over 150 shipping and trading companies gathered in Geneva recently for the 10th anniversary Gala of Mercy Ships Cargo Day, celebrating a decade of industry support for the international charity.
David Walker, Head of Chartering at Sahara Energy Geneva and Chairman of the Cargo Day Geneva Committee, joined industry leaders at the event, where he thanked the global shipping community, sponsors, media partners and Cargo Day committees in Geneva, London, Houston, Dubai and Singapore for supporting the initiative.
Cargo Day brings together charterers, shipowners, shipbrokers, and other shipping professionals who contribute through pledges, cargo commissions, and address commissions to support the work of Mercy Ships.
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Kola Motajo, Director, Sahara Geneva said Sahara’s involvement reflects the company’s belief in the ability of enterprise and partnerships to deliver impact beyond business.
“At Sahara, our focus is always on impact and lives transformed. Cargo Day demonstrates what is possible when businesses and individuals unite around a shared purpose. The $20 million milestone reflects the collective commitment of the global shipping community to improving healthcare in Africa. As Sahara looks Beyond XXX, we remain committed to building connections that create lasting value and possibilities for generations to come,” Motajo said.
Reflecting on Cargo Day’s growth, Walker said: “Ten years ago, we raised $300,000 and there were 70 people at the Gala. Today, we have more than 500 people coming from around the world to support such a great cause.”
Cargo Day 2025 raised more than $2.5 million, with 93 companies participating, including charterers, brokers, shipowners, and other partners.
Mercy Ships operates two hospital ships supporting patients in Africa with free life-changing surgeries, while also providing training and mentoring for local healthcare professionals. Cargo Day funding contributes to expenses associated with operating the hospital ships.
The 2026 Cargo Day campaign begins November 4 and will run through November and December, with companies participating through Mercy Cargoes, address commissions and pledges.
Up to 30 Nigerian graduates have bagged postgraduate scholarships to pursue further studies both locally and in the Diaspora.
According to the Nigerian National Petroleum Company Limited (NNPC Ltd) and Italian energy company, Eni have awarded postgraduate scholarships
The beneficiaries emerged from more than 3,000 applicants following assessments of their academic records and performances in a recently conducted computer-based test (CBT).
The awards are under the 2026/2027 Postgraduate Scholarship Scheme of Nigerian Agip Exploration Limited (NAE), an Eni subsidiary, on behalf of the NNPC-NAE Production Sharing Contract (PSC) partners.
In a statement, NAE’s Vice Chairman and Managing Director, Maurizio Pinna, said the initiative was designed to develop local talent and equip young Nigerians with skills relevant to the oil and gas industry. Pinna congratulated the beneficiaries, noting that the scholarships would enable them to pursue their academic ambitions and achieve their career goals.
According to NAE, the programme reflects its commitment to education, innovation and capacity building in Nigeria.
The company urged the beneficiaries to make good use of the opportunity by acquiring valuable knowledge and skills that would contribute to national development, particularly in the energy sector.
Ten of the awardees will undertake postgraduate studies in universities abroad, including Imperial College London, Robert Gordon University in Aberdeen, Newcastle University, the University of Aberdeen and the University of Hull in the United Kingdom.
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The remaining 20 beneficiaries will study at Nigerian universities in fields including engineering, geosciences, petroleum and environmental technology, energy economics, renewable energy and energy transition.
Established in 2007, the NNPC-NAE PSC postgraduate scholarship scheme is part of the partners’ human capital development programme aimed at promoting specialised knowledge and addressing skills shortages in Nigeria’s deep offshore oil and gas operations.
NAE said 380 Nigerian graduates had benefited from the scheme since its inception, gaining knowledge and skills required by the oil and gas industry.
Beyond education, Eni, through NAE, has implemented sustainability initiatives in Nigeria covering healthcare, access to water, infrastructure and community empowerment.
Eni has operated in Nigeria since 1962 and currently has an equity production of about 55,000 barrels of oil equivalent per day. The company also holds a 10.4 per cent stake in Nigeria LNG.
NAE was incorporated in 1996 to manage Eni’s deep offshore exploration and production assets. It became the first oil and gas company in Nigeria to produce oil from the country’s deep offshore when its Abo floating production, storage and offloading (FPSO) vessel began operations in 2003.
The company has interests in nine offshore blocks in Nigeria, either as operator or co-venturer, including PML 102 and PML 103, where the Zabazaba-Etan fields are being developed.
The Dangote Petroleum Refinery and Petrochemicals’ (DPRP) decision to seek leave to appeal a Federal High Court (FHC) judgment directing the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to continue issuing petroleum product import licences to three major oil marketers is being backed by the Energy Watchdog.
This was detailed in a statement by Martins Tayo, which considers the move as necessary to protect Nigeria’s domestic refining industry and reduce dependence on imported petroleum products.
The judgment, delivered on September 28, 2026, by Justice Inyang E. Ekwo in Suit No. FHC/ABJ/CS/1363/2026, ordered the NMDPRA to continue issuing import licences to Matrix Energy, AA Rano and AYM Shafa.
The Energy Watchdog argued that the ruling undermined the objectives of the Petroleum Industry Act (PIA) and threatened investments in domestic refining capacity.
“We completely reject and condemn in totality the judgment of the lower court. It is a deeply flawed decision that disregards the clear intent of the Petroleum Industry Act and the national interest in building a robust domestic refining industry,” the statement said.
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The group further cited a reported decline in petrol imports in the first quarter of 2026, alongside increased supplies from local refineries, particularly the Dangote facility, as evidence of the country’s growing domestic refining capacity.
It argued that sustaining import licences despite rising local production could undermine efforts to achieve self-sufficiency in refined petroleum products and weaken investor confidence in the sector.
According to the organisation, Dangote Refinery’s decision to seek leave to appeal as an interested party was timely, given the potential implications of the judgment for the future of Nigeria’s downstream petroleum industry.
“The lower court’s decision amounts to a judicial endorsement of continued importation irrespective of local capacity.
“We condemn it without reservation because it threatens to reverse the hard-won gains of the last few years,” Tayo stated
The Energy Watchdog maintained that the Petroleum Industry Act was designed to encourage investment in midstream and downstream infrastructure, warning that allowing the ruling to stand could send a negative signal to investors who have committed substantial resources to domestic refining projects.
The group urged the Court of Appeal to grant the DPRP leave to appeal and ultimately set aside the FHC’s order, describing the case as significant to Nigeria’s energy security and the development of its refining industry.
“Any judgment that forces the continued importation of fuel products when local refineries can supply the market is a setback for Nigeria.
“We condemn the lower court ruling in the strongest terms and fully support the appeal filed by Dangote Refinery,” the statement concluded, “The Court of Appeal must correct this error and reaffirm that the era of automatic import licences is over.”
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