Options Traders See Yuan Collapse Continuing In “Dangerous Situation For Policy-Makers”

• Options Traders See Yuan Collapse Continuing In “Dangerous Situation For Policy-Makers”
  by Tyler Durden, www.zerohedge.com  
  Surely, The PBOC will step in at some point and save the collapsing currency? Nope – not if options traders (and Kyle Bass) are to be believed. The odds of the yuan breaking beyond 7 to the greenback by the end of March more than doubled to 12% (from 5.8% at the start of December). Ironically, Bloomberg reports only 1 of 39 analyst predicts Yuan to trade beyond 7 by the end of 2016. The market’s extremely strong conviction, and apparent PBOC loss of control is “a dangerous situation for policy-makers” according to one Asian economist. 
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  As Kyle Bass noted, 
  “Given our views on credit contraction in Asia, and in China in particular, let’s say they are going to go through a banking loss cycle like we went through during the Great Financial Crisis, there’s one thing that is going to happen: China is going to have to dramatically devalue its currency.”
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  And as Bloomberg reports, the options market agrees – signaling that the yuan’s slide to a five-year low has plenty of room to run. 
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  Contract prices indicate a 79 percent probability that the currency will weaken this year and 33 percent odds that it will drop beyond 7 per dollar, a level last seen in 2008,
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