Does that signal an uptrend? Not necessarily.
Jannarone is not optimistic about future returns. He reports that CYB’s manager “paid a premium above the spot rate because the market already had priced in currency appreciation down the line.”
Jannarone thinks that in order for CYB to profit, the market will have to underestimate the pace of the yuan’s appreciation. But, as Wang pointed out, the likelihood of a large price appreciation does not seem likely, especially given China’s resistance in revaluing its currency in the first place.
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Sumin Kim contributed to this article.