Many believe that the Chinese currency will eventually become number "yuan" to the U.S. dollar, so it’s fortunate for them that there’s an exchange traded fund (ETF) to track it.
WisdomTree Chinese Yuan Fund (CYB), launched on May 22, is a straightforward, highly liquid way to play the yuan against the dollar, reports Steven Halpern for Blogging Stocks.
The major China-U.S. dynamic that has developed over the past few years has also led to a drastically different global economic climate, says Halpern. The dynamic tends to operate like this:
- China sends goods to the United States
- The United States sends dollars to China
- China sends dollars back to United States
- The United States sends treasuries to China
Currency expert Jack Crooks says that underlying this capital flow is an artificially undervalued Chinese yuan, and it’s a major reason China has become a major supplier of goods and capital to the rest of the world.
If the yuan continues to appreciate, as it has in recent times, it will put more power in the hands of the Chinese consumer. It’s in the government’s best interest to keep the momentum going.
Meanwhile, WisdomTree added two more currency ETFs to their lineup this week: