Forex Blog: Currency Trading News & Analysis.

August 16th 2005

Hedge Funds and Asian Currencies

Hedge funds previously rode the wave of ‘hot money’ into China, betting that China would further revalue the Yuan in the short-term. According to industry insiders, however, hedge funds may abandon their positions in the Yuan, due to a fundamental lack of profitability. Hedge funds require high returns on their investments, and the 1% interest rates that the Bank of China pays them while they wait for further revaluation has become untenable. It is also becoming more expensive to bet against other Asian currencies, because of higher borrowing costs, which are tied to American interest rates. In short, hedge funds are gradually unraveling their bets on the Yuan; western firms because the best are unprofitable, and Asian firms because they simply don’t believe further revaluations will take place.

Read More: Yuan may not be so lucrative for hedge funds

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Posted by Adam Kritzer | in Chinese Yuan (RMB), Investing & Trading | No Comments »

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© 2004 - 2018 Forex Blog.org. Currency charts © their sources. While we aim to analyze and try to forceast the forex markets, none of what we publish should be taken as personalized investment advice. Forex exchange rates depend on many factors like monetary policy, currency inflation, and geo-political risks that may not be forseen. Forex trading & investing involves a significant risk of loss.