Excerpt from: Bonds and Interest Rates CFDs and Spread Bets
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| October 20, 2006 | | Spread betting and CFD orders that favour Asian bonds could be profitable as the Chinese yuan increases | Individuals cannot trade the Chinese yuan on the FX market, but that doesn't stop China's currency from being influential in the region. Right now, it is expected that Asian bonds will be positively affected as the yuan increases by an expected five to seven per cent next year. This means spread bets and CFDs on Asian bonds could yield good profits. Bloomberg reports:
China will allow the yuan to rise 5 percent to 7 percent
next year as the government seeks to slow the economy and
inflation, said Maronilla. China's limits on foreign-exchange
trading mean investors may turn to fixed-income securities of
neighboring Asian countries to benefit from the increase in
returns linked to currency gains.
``We're still very bullish for currency appreciation on a
gradual basis, led by China,'' said Hong-Kong based Maronilla,
who helps manage $1.3 billion in Asian bonds. ``We're continuing
to expect to see strong Asian bond performance,'' he said at a
briefing to reporters yesterday.
A strengthening yuan may prompt central banks in other Asian
nations to let their currencies gain as it would leave them room
to allow appreciation without losing export competitiveness. A
rising yuan also reduces the cost for Chinese consumers of
imports from the region, helping ease inflation. | | |
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