SHANGHAI, Nov 30 Reuters As macroeconomic risks induce unprecedented levels of volatility in China39;s yuan, investors are betting that authorities may widen the currency39;s tight trading band for first time since 2014 to allow market forces greater say.

China39;s yuan is allowed to move in a narrow range of 2 against the U.S. dollar, around a daily official midpoint fixing set by the People39;s Bank of China PBOC.

In the 8 years since the band was defined, the currency has rarely ever moved beyond 1 on either side of the midpoint.

It lost its languor in September as an aggressive Federal Reserve and robust dollar pushed the yuan to the weaker side of 7 versus the greenback, foreign capital fled an economy struggling under regulatory and COVID19 crackdowns, and the PBOC seemed okay letting market forces decide where the yuan should be.

We see a possibility of the PBOC widening the yuan39;s daily trading band against the dollar to 3 from 2 in 2023, given greater tolerance of increased market volatility, said Becky Liu, head of China macro strategy at Standard Chartered Bank.

Daytoday yuan volatility has been as high as 16 on some days in October, compared with a tame 1 to 4 range in the months and years before. The currency came close to touching the weak end of the band in five out of 16 trading days in October.

Implied volatility, an options market gauge of future volatility, has spiked. An options trader said the market was long volatility.

One, 3 and 6month ,…