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Carry Traders Suffer from Decline of Yuan

February 27, 2014 at 17:12 by Vladimir Vyun

A fan of 50-yuan billsThe Chinese yuan slid today as speculations persisted that China’s central bank is intervening in an attempt to prevent gains of currency, hurting those investors who hoped to use the yuan in carry trade.

The yuan has been considered one of the best currencies for carry traders due to relatively high interest rates in China and low volatility of the exchange rate. But now the currency became one of the worst as it was falling amid speculations about interventions of the People’s Bank of China. Falling currency tends to eat away profits from carry trade. It is expected that the yuan will fall even more as investors unwind their positions.

USD/CNY was up from 6.1247 to 6.1283 as of 17:10 GMT today.

If you have any questions, comments, or opinions regarding the Chinese Yuan, feel free to post them using the commentary form below.

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