Chinese Yuan

The Chinese yuan ended the domestic OTC trading session today below 7 yuan per U.S. dollar level — for the first time since the end of the peg to dollar in 2005. After USD/CNY closed at 7.0016 yesterday, the exchange rate of the Chinese currency went up today and traded in the 6.9930-6.9907 boundaries on the OTC Forex market. Since November 2007, China’s government is working to appreciate the yuan to keep down the rising national inflation. The People’s Bank of China set the central parity rate for the yuan at 6.9920 today against 7.0025 yesterday. That means a major break through the important psychological barrier for the dollar-yuan rate, which can open a way for the further possible depreciation of the U.S. dollar versus the Chinese currency. And the lower USD/CNY rate is very i

This is an update on the performance of the Chinese Yuan Carry Trade Basket. The experiment was started with a base of $100,000 on March 20, 2007. I have included the performance figures for both of the experiments that I have been running, although they are the same in composition, I have leveraged them differently. Since Inception (5 times leveraged basket): Increase (decrease) in Account Balance: $27,338.01 Increase (decrease) in Unrealized Gains: $20,811.01 Increase (decrease) in Net Asset Value: $48,148.52 Total Portfolio Value: $148,148.52 +48.15% Since Inception (10 times leveraged basket): Increase (decrease) in Account Balance: $54,675.02 Increase (decrease) in Unrealized Gains: $41,622.02 Increase (decrease) in Net Asset Value: $96,297.04 Total Portfolio Value: $196,297.04 +96.29% As an update, each currency pair in this basket, minus the USD/CNY pair is showing an unrealized profit. The 10x leveraged currency basket yields about $347.41 in interest per day, r

This is an update on the performance of the Chinese Yuan Carry Trade Basket. The experiment was started with a base of $100,000 on March 20, 2007. I have included the performance figures for both of the experiments that I have been running, although they are the same in composition, I have leveraged them differently. Since Inception (5 times leveraged basket): Increase (decrease) in Account Balance: $11,019.70 Increase (decrease) in Unrealized Gains: $23,221.74 Increase (decrease) in Net Asset Value: $34,241.44 Total Portfolio Value: $134,241.44 +34.24% Since Inception (10 times leveraged basket): Increase (decrease) in Account Balance: $22,039.40 Increase (decrease) in Unrealized Gains: $46,443.47 Increase (decrease) in Net Asset Value: $68,482.87 Total Portfolio Value: $168,482.87 +68.48% +55.87% In 17 days since the last update, the portfolio has increased by 12.61%, which has been due to the continued weakness in the US Dollar versus all major currencies.

This is an update on the performance of the Chinese Yuan Carry Trade Basket. The experiment was started with a base of $100,000 on March 20, 2007. I have included the performance figures for both of the experiments that I have been running, although they are the same in composition, I have leveraged them differently. Since Inception (5 times leveraged basket): Increase (decrease) in Account Balance: $9,569.53 Increase (decrease) in Unrealized Gains: $18,364.90 Increase (decrease) in Net Asset Value: $27,934.43 Total Portfolio Value: $127,934.43 +27.93% Since Inception (10 times leveraged basket): Increase (decrease) in Account Balance: $19,139.05 Increase (decrease) in Unrealized Gains: $36,729.80 Increase (decrease) in Net Asset Value: $55,868.85 Total Portfolio Value: $155,868.85 +55.87% The Chinese Yuan Carry Trade Basket has been traded for over three months and has given an investor an annualized return of 97.09% and 194.20% respectively. While past performance i

Here is an update on the performance of the Chinese Yuan Carry Trade Basket. The experiment was started with a base of $100,000 on March 20, 2007. Since Inception: Increase (decrease) in Account Balance: $7,379.42 Increase (decrease) in Unrealized Gains: $12,751.94 Increase (decrease) in Net Asset Value: $20,131.36 Total Portfolio Value: $120,131.36 +20.13% Although the Chinese Yuan has been gaining considerable strength over the past three months, declining about 1.31%, my belief is that the currency will tread water for now.  The quick decline was due to political pressure placed on China to appreciate the Yuan.  I have also been running the Chinese Yuan Carry Trade Basket at double the size of the positions as was presented in the original post.  The performance of that fund is just two times the above performance figures.  Please check back for further updates at a later time.  I would appreciate any suggestions on improving the strategy.

Here is an update on the performance of the Chinese Yuan Carry Trade Basket. The experiment was started with a base of $100,000 on March 20, 2007. Since Inception: Increase (decrease) in Account Balance: $7,379.42 Increase (decrease) in Unrealized Gains: $12,751.94 Increase (decrease) in Net Asset Value: $20,131.36 Total Portfolio Value: $120,131.36 +20.13% Although the Chinese Yuan has been gaining considerable strength over the past three months, declining about 1.31%, my belief is that the currency will tread water for now.  The quick decline was due to political pressure placed on China to appreciate the Yuan.  I have also been running the Chinese Yuan Carry Trade Basket at double the size of the positions as was presented in the original post.  The performance of that fund is just two times the above performance figures.  Please check back for further updates at a later time.  I would appreciate any suggestions on improving the strategy.

The world turned its focus to the currency market today as China made its second most significant revaluation move in two years. The central bank of China announced this morning that they were widening the trading band for the Yuan, increasing reserve requirements and raising interest rates. The last time China revalued its currency was in July 2005 and just as that move came a week after the US imposed a timetable for Chinese revaluation, this move comes in the midst of the G8 meeting and a week before a Chinese delegation arrives in the US for talks with Treasury Secretary Paulson. This politically well timed move is characteristic of most moves made by China. As a proxy for Asian strength or weakness, the latest announcement has sent the Japanese Yen rallying. It has also sent the U

Here is an update on the performance of the Chinese Yuan Carry Trade Basket.  The experiment was started with a base of $100,000 on March 20, 2007. Since Inception: Increase (decrease) in Account Balance: $2,646.52 Increase (decrease) in Unrealized Gains: $9,830.41 Increase (decrease) in Net Asset Value: $12,476.93 Total Portfolio Value: $112,476.93        +12.48% Since Last Update on April 7, 2007 (One Week): Increase (decrease) in Account Balance: $791.08 Increase (decrease) in Unrealized Gains:$3,830.41 Increase (decrease) in Net Asset Value: $4,621.49 The basket has been the beneficiary of deteriorating fundamentals of the US Dollar.  All the positions in the basket are in profit, except for the the USD/CNY positions, which is our carry trade borrowing currency.  Please check back for further updates at a later time.  Please post any questions you may have.

Here is an update on the performance of the Chinese Yuan Carry Trade Basket. The experiment was started with a base of $100,000 on March 20, 2007. Since Inception: Increase (decrease) in Account Balance: $2,646.52 Increase (decrease) in Unrealized Gains: $9,830.41 Increase (decrease) in Net Asset Value: $12,476.93 Total Portfolio Value: $112,476.93 +12.48% Since Last Update on April 7, 2007 (One Week): Increase (decrease) in Account Balance: $791.08 Increase (decrease) in Unrealized Gains:$3,830.41 Increase (decrease) in Net Asset Value: $4,621.49 The basket has been the beneficiary of deteriorating fundamentals of the US Dollar. All the positions in the basket are in profit, except for the the USD/CNY positions, which is our carry trade borrowing currency. Please check back for further updates at a later time. Please post any questions you may have.

The success of this basket so far is exceeding my initial expectations. I have uploaded a spreadsheet of the account transactions, including interest payments, available for download if you wish to inspect the results. While the overall sentiment over the past few weeks (since March 20, 2007) has been bearish the dollar, I still feel that this basket can still continue similar returns in any currency environment. I am a bit disappointed with Oanda for increasing the interest rate at which an investor can borrow at in Chinese Yuan (Previously it was -1%; now it has increased to .5% for a total increase of 1.5%), but we can make due with what we have. The results after two weeks: Total Increase (Decrease) in Account Balance: $1,855.44 Total Increase (Decrease) in Unrealized Gains: ~$6,000.00 Total Increase (Decrease) in Net Asset Value: $7,855.44, or a 7.86% Return in Two Weeks The 7.86% return in two weeks represents an annual return of 204.36% without compounding. Now the timing of the

The success of this basket so far is exceeding my initial expectations. I have uploaded a spreadsheet of the account transactions, including interest payments, available for download if you wish to inspect the results. While the overall sentiment over the past few weeks (since March 20, 2007) has been bearish the dollar, I still feel that this basket can still continue similar returns in any currency environment. I am a bit disappointed with Oanda for increasing the interest rate at which an investor can borrow at in Chinese Yuan (Previously it was -1%; now it has increased to .5% for a total increase of 1.5%), but we can make due with what we have. The results after two weeks: Total Increase (Decrease) in Account Balance: $1,855.44 Total Increase (Decrease) in Unrealized Gains: ~$6,000.00 Total Increase (Decrease) in Net Asset Value: $7,855.44, or a 7.86% Return in Two Weeks The 7.86% return in two weeks represents an annual return of 204.36% without compounding. Now the timing of the

In the previous post entitled “Chinese Yuan Carry Trade Basket Experiment,” I described the basic composition of the basket of currencies in that post and this post I have set out to develop a plan to further take advantage of the interest that is received on the currency positions.  I looked to a popular stock investment strategy, entitled DRIP (Dividend Reinvestment Plan), takes the dividends that a company pays on its stock reinvests the dividend into that company’s stock. The DRIP strategy runs off of the idea of compounding, where you are receiving dividends, reinvesting those dividends, and then earning dividends off of your initial investment plus the stock which was purchased in the reinvestment plan. I am proposing using the idea of the DRIP strategy in combination with the carry trade basket so that the interest that is paid on the basket is reinvested equally over the entire basket, instead of different amounts being invested in the specific currency pair

As mentioned in my previous post in regards to the New Turkish Lira being the top currency choice to hold long in a carry trade portfolio, my new short position choice is now the Chinese Yuan. The FOREX broker that I use, Oanda, is currently offering an interest rate of 5.925% per annum to traders who hold the USD/CNY long, meaning long USD and short CNY. Even though the Chinese Yuan is currently being allowed to appreciate by its government, the Yuan has only appreciated against the dollar by about 3.6% over the past year. It is not in the best interest of the Chinese government to allow its currency to appreciate greatly against the other world currencies, especially the US Dollar, because of China’s dependence on exports. All the talk over the past few weeks has been about the carry trade implosion when Japan announced and put into action its end to the 0% interest rate policy.  Over the past few days, all the talk has shifted to the Swiss Franc because investors are now look

From the Oanda forum: The following new pairs are available on FXGame: EUR/TRY (Euro/Turkish Lira) USD/TRY (US Dollar/Turkish Lira) USD/INR (US Dollar/Indian Rupee) USD/TWD (US Dollar/New Taiwan Dollar) USD/CNY (US Dollar/Chinese Yuan) Please note that these pairs are being deployed on a beta basis as we work through operational issues ensuring the stability of underlying bank links. To add these new pairs, you will have to clear you Java cache by following the instructions here: http://fxtrade.oanda.com/help/clear_cache.shtml You will then have to add the new pairs by accessing the Tools -> "User Preferences" -> Quotes (tab) And adding them to your "Quote List".Goodie! It means these exotic currency crosses will be there for us to trade on FXTrade real soon. Will update on Monday to give you the spreads and interest rates of these new pairs.