Chinese Renminbi
- Thread starter J-S
- Start date
So what?
PTR generates revenues & profits in RMB. Those RMB/share will become more valuable post-revaluation.
Assuming the market hasn't fully discounted future RMB revaluations, holding an RMB-profit generating firm should offer RMB exposure to investors, regardless of the currency denomination of the security.
BTW: a short time ago I asked Baron to delet my 'dumbshit' post, if only to avoid getting drawn into this discussion.
Why not short $ HKD as a proxy - it is a floating currency within a band but it is right at the top of the band so v little currency risk in shorting the dollar unless they devalue, not revalue, the HKD. The funding cost is just 3.2 pips per day but you could just short the dollar on a Friday and buy it back on the Monday, thus incurring just one day's funding. Usually if there is a currency move it is carried out at the weekend to minimise market disruption.
To short either USD/HKD or USD/JPY is OK, but only when you feel the revaluation is imminent. For now I don't think so. Nobody could predict when Chinese government will let rmb appreciate, for they dislike anybody especially speculators knowing their plan.
But even the rumors of rmb revaluation can bring us chances, right? When there is new rumors or new pressures or hints from big figures' mouths on that affair, just short USD/JPY. And if you or your company have import/export business with China and then is qualified to trade USD/RMB forwards with China's commercial banks, you are able to do arbitrage between China's domestic deliverable USD/RMB forwards market and oversea's NDF markets. As long as RMB becomes hot spot again and the premium of NDF (for 1 year) is larger than about 2700pips, you can earn free money without risk by this arbitrage.