Exchange traded funds (ETFs) tracking the movements of the Chinese yuan are on the move today after China finally bowed to international pressure and allowed the currency to appreciate.Today, the yuan advanced to its highest level since 1993 in Monday afternoon trade in Asia, advancing 0.4% to 6.7941 to the dollar in China’s over-the-counter market, reports Deborah Levine for MarketWatch. It has been reiterated that an uptick in China’s yuan wouldn’t alone boost world growth. Therefore, the Chinese government is urging other countries to follow through with more reform. [China ETFs, Rising Wages and the Trade Deficit.]
Elaine Kurtainbach for Associated Press reports that the central bank delivered on its weekend promise to give up the dollar peg imposed two years ago to help Chinese exporters cope with the global downturn. Analysts said the move was mainly aimed at countering criticism of Beijing’s currency policies ahead of this weekend’s summit of the Group of 20 leading economies. [China’s Yuan Decision Moves ETFs.]
There are no major changes to exchange rates, and volatility can still be expected, as the yuan is subject to a 0.5% daily trading range. Few expect the yuan to appreciate hugely, since this move was largely to silence critics. Removing any more dependence on outside exports is a major point that the country will act upon soon.
For more stories about currency ETFs, visit our currency ETFs category. You can gain exposure to the yuan through either the exchange traded note (ETN) Market Vectors Chinese Renminbi ETN (NYSEArca: CNY) or the following ETFs:
- WisdomTree Dreyfus Chinese Yuan Fund (NYSEArca: CYB)
- WisdomTree Dreyfus Emerging Currency (NYSEArca: CEW): 9% weighting in the Chinese yuan
Tisha Guerrero contributed to this article.
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.