ETFs to Watch as Chinese Yuan Battle Heats Up | ETF Trends

It’s old news that many U.S. economists view the Chinese currency as undervalued by as much as 40%. Treasury Secretary Timothy Geithner is encouraging the country to return to a flexible exchange rate. If China acquiesces, two exchange traded funds (ETFs) can provide a way to get in on the action.

Although the U.S. government will continue to press the Chinese to reassess their currency, Geithner announced that ultimately, it will be up to the Chinese to decide whether a more flexible yuan will be beneficial, reports David Lawder and Kevin Yao of Reuters. Geithner had to choose his words carefully, because the issue is a sensitive one.

“I am confident that China will decide it’s in their interest to resume the move to a more flexible exchange rate that they began some years ago and suspended in the midst of the crisis,” Geithner said. [Play the Yuan’s Fortunes With These ETFs.]

Geithner also announced that he would delay a report on China’s currency policies and instead, work with the Group of 20 to press for more flexible exchange rates.

This week, Geithner is in China to head off any confrontation on the issue.