Chinese RMB

[damien275x]

Excuse me if this is in the wrong forum. What do you guys think about buying some Chinese Yuan, it looks like it's been artificially surpressed right now and could rise in the long term. Given the AUD strength right now, could be a good bet? Has this been discussed anywhere. Couldnt find it in search. Thanks

 

[prawn_86]

As far as i am aware you cant actually buy it unless you go to China and smuggle the cash out of the country.

You can't hold a CNY account unless you are a Chinese national and even then there are strict controls on it.

 

[tothemax6]

Excuse me if this is in the wrong forum. What do you guys think about buying some Chinese Yuan, it looks like it's been artificially surpressed right now and could rise in the long term. Given the AUD strength right now, could be a good bet? Has this been discussed anywhere. Couldnt find it in search. Thanks

Yuan is hard to buy, yes, but not impossible. The forex broker OANDA offers a USD/CNY instrument, albeit with a fairly high spread.
There has been talk about upward valuation for years now, but little has happened. Because the exchange rate moves so small when the yuan does appreciate, you have to hold a much larger position than normal to make any kind of profit from the move. The size of the position limits your remaining margin, and the interest payments on the position are expensive as you sit there for ages waiting for a move.

Yes it is true that the yuan is undervalued. This is proven by the fact that the central bank is continuously accumulating massive reserves of USD. However, China is well due for a crash given its massive construction bubble. Difficult call.

 

[Neutral]

There are some ETFs floating around for the RMB/USD. One such is Market Vector on NYSE (ticker code CNY)
I'm not sure if you can earn interest from an ETF though? The yield on this pair would be quite good if you could. China has been steadily increasing interest rates for some time and the US doesn't look to for a while... although June will tell with the end of QE2 how the market will react and if the Fed will at least temporarily increase rates.

EDIT: I just read that you can gain on yields through ETFs. However, the level of liquidity nor leverage exists for ETFs compared to direct FX investing.

 

[damien275x]

There are some ETFs floating around for the RMB/USD. One such is Market Vector on NYSE (ticker code CNY)
I'm not sure if you can earn interest from an ETF though? The yield on this pair would be quite good if you could. China has been steadily increasing interest rates for some time and the US doesn't look to for a while... although June will tell with the end of QE2 how the market will react and if the Fed will at least temporarily increase rates.

EDIT: I just read that you can gain on yields through ETFs. However, the level of liquidity nor leverage exists for ETFs compared to direct FX investing.

Are there any in ASX or no. I just want to put say 10,000 into RMB and wait 5 years with no effort maintaining and logging into crap

 

[prawn_86]

Are there any in ASX or no. I just want to put say 10,000 into RMB and wait 5 years with no effort maintaining and logging into crap

Not possible unless you can smuggle the cash out of China

 

[Neutral]

Are there any in ASX or no. I just want to put say 10,000 into RMB and wait 5 years with no effort maintaining and logging into crap

There's only 1 currency ETF through the ASX which tracks the USD against the AUD.
http://www.asx.com.au/products/managed-funds-product-list.htm#CurrencyETFs

You would have to buy the USD/RMB ETF listed on the NYSE through an international broker or Commonwealth and I think one of the other big 4 offer int shares aswell.

FTR I've never bought an ETF (although they are becoming quite popular) so DYOR.

 

[tothemax6]

Are there any in ASX or no. I just want to put say 10,000 into RMB and wait 5 years with no effort maintaining and logging into crap

Well the ASX is 'Australian Stock Exchange' so I doubt it. What you are looking to do is a currency trade. Perhaps one might want to look at some forex brokers. Or even go to a bank and say 'can youz give me a stack of chinaman notes', if you don't mind forgoing the interest. They must stock it surely - people do go on holiday to china.

 

[sinner]

Not possible unless you can smuggle the cash out of China

10,000 is the size of 1 minilot on Oanda.

I could sell one USD/CNY minilot in an account funded with 10,000 with no stoploss, exit the position at any time 24/5 and collect or pay the equivalent difference in the rates movement since the position was entered paying a spread far lower than that offered by cash forex dealers.

If I wanted to get tricky, could even do a synthetic AUD/CNY position but it would require more funding in the account.

This meets the OPs "just want to put say 10,000 into RMB and wait 5 years with no effort maintaining and logging into crap" requirement. Set up an account with a broker which provides USD/CNY (I think there are also CNY futures on the ICE), enter the position, only have to log in again when you want to exit.