On Mar 13, 5:00 pm, marywilliams1...[at]yahoo.com wrote:
- quote -

As Rich explains below (above) it works if:

- both sides of the transaction trust each other (or the exchange)
- the physical commodity (in this case Yuan) never trades hands

In the case of the world's largest bond markets (Japanese Government
and US Treasury) Futures trading far outweighs actual cash trading of
bonds. The normal portfolio manager decision is to simply roll the
position (as futures) rather than ever taking cash or buying bonds.

Commodity markets work similarly-- relatively few transactions involve
taking physical delivery of the commodity.

'grey' markets are quite common, and quite useful, in that they give
useful information and help bound the size of true black markets. It
would be enormously useful for example, if we could construct grey
markets in heroin, marijuana and cocaine- 1 pound of Columbia Gold,
Harlem Street Price, as an example deliverable. It would tell us a
lot from a public policy point of view.

If we ever get round to petrol rationing, I imagine there will be a
'white' market in petrol rationing coupons.


======================================= MODERATOR'S COMMENT:
Posters to this thread should relate comments to general financial planning.

marywilliams1956[at]yahoo.com writes:

- quote -

It's possible because the contracts are cash-settled -- there's nothing
that needs to be obtained.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

- quote -

How is it possible that theres a futures market in something that cant
even be obtained?

~M

----
http://www.NovelTracker.com - top ten novels, ranked hourly.

On Mar 8, 5:55 pm, beliav...[at]aol.com wrote:

- quote -

I suppose one could therefore construct a straddle position? ie
limiting one's losses to say, 10%?

(I'm equating futures markets to option markets in this case, which I
realise is wrong).

On Mar 8, 10:03 am, marywilliams1...[at]yahoo.com wrote:
- quote -

I don't recommend it, but you can SPECULATE on the yuan, up or down,
by trading Chinese Renminbi/us Dollar Futures on the Chicago
Mercantile Exchange http://www.cme.com/trading/dta/del/p...roductType=cur
. The contracts are cash settled.

On Mar 8, 7:03 am, marywilliams1...[at]yahoo.com wrote:
- quote -

Not really. Why is it odd? I don't think the Yuan (or RMB) is the
only currency not freely traded.


- quote -


Legally there is a restriction of how much you can take out of the
country (just like the US). Afterall millions of Chinese tourists go
to HK and Macau, and both will accept RMB as currency (eventhough both
are really Chinese, they have their own currencies).



- quote -

On Mar 8, 3:03 pm, marywilliams1...[at]yahoo.com wrote:
- quote -

Or we haven't thought of one-- as I say, there might be bonds or
deposit accounts I don't know about. Before the 1990s this situation
was very common in the world. Indeed in the UK up until the 1970s,
the maximum you could take out of the country at any one time was
£100.

Countries like Cuba and Syria it is still the case.

just out of curiosity, what happens if a tourist goes to
- quote -


Of course people do, and there is a grey market- -currency traders
will buy them.

But this is small amounts, in total. the big numbers are Chinese
exporters and citizens, who must, legally, convert their dollars into
Yuan at the bank.

I can tell you the prices in the airports are set to mop up any spare
yuan you might take to the airport ;-)!

- quote -

So I guess the consensus is that theres no way to invest in the yuan,
very odd. just out of curiosity, what happens if a tourist goes to
china and actually buys yuan and tries to bring them back out of the
country? Never mind import declaration requiments, will china let the
yuan leave, legally?

~M

----
http://www.NovelTracker.com - top ten novels, ranked hourly.

On Mar 7, 1:46 pm, marywilliams1...[at]yahoo.com wrote:
- quote -

Mary

We've had huge discussions on misc.invest.mutual-funds about what
drives exchange rates. See anything posted by Jose Bailen on the
subject (he was an economist for the IMF).

I would say that, broadly, what Beliavsky says is right. The thing
about individual countries and their interest rate policies is that
whilst what you say is very true of small countries with big exports
and imports (think Canada, or Sweden) it is less true of big countries
which set their interest rates more as a result of domestic conditions
(especially the US).

I think it's fair to say there is a market consensus the Yuan must
appreciate, and a consensus that it will only be allowed to do so
gradually, as the Chinese government fears most of all the impact on
domestic job and wealth creation of a rapid rise in its currency.

Which multiplies the risk the market consensus is wrong, and the
adjustment is quicker than expected.

I suggested the Hong Kong market. In terms of currency, that
judgement is *wrong*-- I had forgotten the US dollar peg. In terms of
stocks, I still think Hong Kong companies are mostly preferrable to
Chinese ones: plays on the same factors (especially real estate
prices), but with higher standards of transparency and corporate
governance and generally lower PE ratios.

In terms of companies and stocks, a revaluation of the Yuan is likely
to hurt Chinese companies quite a bit, particularly if it is sudden or
unexpected-- share prices will drop (from current levels which are
already inflated) as the market will expect worse performance by
Chinese exporters.

Commodity exporting countries might also do poorly, if the market
expects Chinese production to be reduced as a result of an
appreciation: I am thinking here of the Australian dollar in
particular.

Countries and currencies that compete with China in exporting (South
Korea, Taiwan, Japan) might do relatively well in a Yuan appreciation
scenario.

I don't think any of us has found a Chinese Yuan deposit account-- -
probably because it is a controlled currency.

There may be some bonds out there that pay in Chinese Yuan, but I
suspect the same restrictions apply.

- quote -

Its not that the interest rates mask the other tendancies, interest
rates reflect the disirablitiy of holding a currency. a country that
wants to make its money worth more raises theinterest rates, and vice
versa, so if two countires want their currencies to stay the same
compared to each other, and the value of one countrys currency drops,
that country has to raise interest rates.

~M

----
http://www.NovelTracker.com - top ten novels, ranked hourly.

On Mar 6, 1:59 am, marywilliams1...[at]yahoo.com wrote:
- quote -


No the HK dollar is officially pegged to the US dollar, not to the
yuan.


- quote -

On Mar 6, 8:36 am, "Gil Faver" <rowdy'sb...[at]xxyz.com> wrote:
- quote -

There is an active market for institutional investors in "non-
deliverable forwards" in the Chinese yuan, and their prices indicate
that the market expects the yuan to gradually RISE, not fall, versus
the dollar. China has a big current account (CA) surplus, and the U.S.
has a big CA deficit. Other things being equal, there is a tendency
for currencies with surpluses (deficits) to appreciate (depreciate).
This effect is often masked by the fact that countries with CA
deficits (the United States, U.K., New Zealand for example) typically
have higher interest rates than those with surpluses (Japan and
Switzerland) -- one needs to adjust for interest rates to discern the
effect of CA on exchange rates in historical data.

On Mar 6, 8:36 am, "Gil Faver" <rowdy'sb...[at]xxyz.com> wrote:
- quote -


I dont think so. I think the yuan is undervalued and the chinese are
keeping it that way to keep their goods affordable. when the yuan
finally goes up, as it must, chinese comapnies will lose money as
their products become more expensive in the us. so investing in a
company doing business is yuan is not the same as investing in the
yuan. but I cant see how to do it.

~M

----
http://www.NovelTracker.com - top ten novels, ranked hourly.

<marywilliams1956[at]yahoo.com> wrote in message
news:1173143655.317092.159990[at]h3g2000cwc.googlegroups.com...
- quote -

isn't is vastly more likely that the Yuan will be devalued relative to the
Dollar than vice versa? that would be the reason NOT to invest in the Yuan.

- quote -

Do you mean pegged to the yuan? Both are tied to the US dollar, right,
at least unofficially. But that may change. That would be the reason
to invest in the yuan.

~M

----
http://FetchBook.info --- find the lowest price on new & used books.

On Mar 5, 5:18 am, darknes...[at]yahoo.com wrote:
- quote -


The HK dollar is pecked to the US dollar.

On Mar 5, 9:59 am, marywilliams1...[at]yahoo.com wrote:
- quote -

It's a controlled currency so I suspect this is difficult.

I checked Everbank.com and didn't find a Yuan deposit account or CD.

You might find a Chinese government bond out there, but I imagine most
that you can buy pay in dollars.

Another possibility is to buy an ETF on the Hong Kong market. Just as
an example:

http://www.streetauthority.com/terms/etf/ewh.asp
http://etf.seekingalpha.com/article/555

Neither is a 'pure play' on the Yuan, but are likely to have some
positive correlation with a rise in the Yuan.

Investing directly in Chinese markets is tricky, as you can see from
last week's performance. Foreigners are not (I believe) allowed to
own many of the stocks, and the market is highly speculative.

Can someone recommend a way to invest in the yuan? My thought was to
invest in companies that benefit from the yuan, but i do wonder if its
possible to invest inthe yuan directly.

Thank you.


~M

----
http://www.NovelTracker.com - top ten novels, ranked hourly.