Following the blueprint pioneered by George Soros—who once successfully broke the Bank of England by launching speculative attacks against the British pound—a handful of funds are taking aim at China's currency, according to a report.
As the world's second largest economy grapples with an economic downturn and volatile markets, The Wall Street Journal reported on Sunday that some of the largest hedge funds on Wall Street are stacking up bets against the yuan. According to the report, Kyle Bass' Hayman Capital Management recently jettisoned much of its positions so it could focus on placing bearish bets on Asian currencies, including the yuan and the Hong Kong dollar. Approximately 85 percent of the firm's bets are now concentrated on bets that will pay big dividends if the yuan and the HK dollar fall over the next three years.
Bass told the WSJ that China's woes are actually "much larger than the subprime crisis," and he believes the country's currency could plummet by as much as 40 percent.
In addition, billionaire investor Stanley Druckenmiller and hedge-fund manager David Tepper have taken short positions against the currency, also known as the renminbi, people familiar with the matter told the Journal. David Einhorn's Greenlight Capital holds options on the yuan depreciating, the report said.