Tuesday, September 15, 2009

The rise of the Yuan

Yuan Inflows to Rise as Dollar Loses Luster, WisdomTree Says -- Bloomberg

Sept. 15 (Bloomberg) -- Investors are putting more money into the yuan
on bets China will allow appreciation in the exchange rate to make it
more accepted as an international currency, according to WisdomTree
Investments Inc.

A weak dollar, linked to concern about record amounts of debt in the
U.S., will drive more funds into China and emerging markets given
prospects growth rates will exceed those in developed countries, Bruce
Lavine, president of investment firm WisdomTree, said in an interview.

Lavine said in each of the last three months there was an inflow of
$25 million into his $142 million Chinese Yuan Exchange-Traded Fund,
which was started in May 2008 and invests mostly in yuan
non-deliverable forwards. ETFs are listed on an exchange where they
are bought and sold daily like stocks.

"Five years from now you will see a thoroughly different landscape in
terms of internationalization of the yuan," said New York-based
Lavine, whose funds oversee $5.1 billion in assets. "When the dam
finally breaks, it happens faster than you think."

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