So far, the Chinese government has denied any charges that it manipulates its currency to boost exports at the expense of American jobs and claims that the U.S.-China trade deficit is not due to the prevailing exchange rate. [5 ETFs for a Google-Less China.]
“The renminbi exchange rate is not the main reason behind the U.S.-China trade deficit,” Foreign Ministry spokeswoman Jiang Yu said. “So naturally, renminbi appreciation is not the solution to rebalance Sino-U.S. trade.”
But the Chinese government does recognize that it may need to enact fiscal policies to curb inflation and help promote domestic demand. As a result, futures are pricing in a 3% appreciation of the yuan against the dollar this year.
For more information on the yuan, visit our Chinese yuan category. Or take a look at our ETF currency report.
- WisdomTree Dreyfus Chinese Yuan Fund ETF (NYSEArca: CYB). CYB tries to produce the total returns reflective of both money market rates in China that is available to foreign investors and change in value of the yuan versus the U.S. dollar. The fund is not a “money market” fund, but it does invest in short-term, investment-grade instruments.
- Market Vectors Renminbi/USD ETN (NYSEArca: CNY). CNY is an exchange traded note (ETN) that delivers exposure to the exchange rate of foreign currencies. The fund tries to reflect the performance of the S&P Chinese Renminbi Total Return Index.
Sumin Kim contributed to this article.