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Thursday, January 27, 2011 6:33:59 PM
Chinese Central Bank Predicts 50%-60% Yuan Gain Next 10 Years
Jan. 26 2011 - 3:05 pm | 454 views | 0 recommendations | 1 comment
By ROBERT LENZNER
David Li, a member of the Chinese Central Bank Policy Committee, believes the Chinese currency– the yuan– will increase in value by 5%-6% a year against the dollar as a result of tightened monetary conditions in China. Li was interviewed in Davos, Switzerland on Bloomberg Television. at the opening of the World Economic Forum. He also emphasized the need to lower the cost of production in China, which a higher yuan would help by reducing the cost of natural resource imports.
A 5% to 6% increase in the value of the yuan in 2011 would be far greater than the gradual 3.6% change in the relationship during 2010. The Obama administration has been pressuring China to let its currency float more freely so as to reduce America’s trade imbalance with China and so increase our exports to China.
A higher value for the Chinese currency would also enable Chinese companies to more easily invest in the US and even make acquisitions that could in time increase the number of jobs, reducing our unemployment. But, economists have been warning not to pressure China– but to let its government take the initiative in its own timing to let the yuan float.
The most direct way to invest inn the Chinese currency is an ETF Wisdom Tree China Yuan(CYB), which is traded on the NYSE. It has assets of about $640 million, which it uses to buy forward contracts on the yuan. So, if the yuan appreciates by 5% to 6% a year, CYB should gain almost that amount each year as well.
Jan. 26 2011 - 3:05 pm | 454 views | 0 recommendations | 1 comment
By ROBERT LENZNER
David Li, a member of the Chinese Central Bank Policy Committee, believes the Chinese currency– the yuan– will increase in value by 5%-6% a year against the dollar as a result of tightened monetary conditions in China. Li was interviewed in Davos, Switzerland on Bloomberg Television. at the opening of the World Economic Forum. He also emphasized the need to lower the cost of production in China, which a higher yuan would help by reducing the cost of natural resource imports.
A 5% to 6% increase in the value of the yuan in 2011 would be far greater than the gradual 3.6% change in the relationship during 2010. The Obama administration has been pressuring China to let its currency float more freely so as to reduce America’s trade imbalance with China and so increase our exports to China.
A higher value for the Chinese currency would also enable Chinese companies to more easily invest in the US and even make acquisitions that could in time increase the number of jobs, reducing our unemployment. But, economists have been warning not to pressure China– but to let its government take the initiative in its own timing to let the yuan float.
The most direct way to invest inn the Chinese currency is an ETF Wisdom Tree China Yuan(CYB), which is traded on the NYSE. It has assets of about $640 million, which it uses to buy forward contracts on the yuan. So, if the yuan appreciates by 5% to 6% a year, CYB should gain almost that amount each year as well.
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