ETF Trends
ETF Trends

The exact path of the Chinese yuan has analysts stumped, and exchange traded funds (ETFs) focused in currency are ready to take the ride. Many are anticipating another upward run against the U.S. dollar, as the yuan has recently taken a breather, reports Andrew Batson for The Wall Street Journal.

There are numerous reasons the yuan will continue to rise against the dollar, and possibly the euro, in the near future:

  • China has a huge surplus in its trade and investment accounts with the rest of the world. Outsiders demand for their currency outweighs the demand for foreign exchange.
  • China has as surging inflation rate of 8% this year, and this will help the central bank take the edge off the rising prices of imported goods like oil.
  • The yuan is rumored to be the best one-way bet in the financial world, given that many do not expect a decline anytime soon.

As of now, the yuan trades against the dollar at 6.90 yuan to the dollar, compared to the previous 8.28 prior to July 2005. The central bank has varied the yuan appreciation pace from month to month, leaving market participants guessing.

ETFs to help investors beenfit from the rising yuan:

  • WisdomTree Dreyfus Chinese Yuan Fund (CYB)
  • Market Vectors Chinese Renminbi/USD ETN (CNY)

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.