If you want to take advantage of the grossly devalued Chinese currency, then you need to know how to invest in Chinese currency. China has kept its currency at an extremely low level against a basket of other currencies because it wants to support its export driven economy. However, that may not last that much longer. Due to mounting international criticism and runaway domestic inflation, China may soon have to revalue its currency. That just might translate to great profit for you if you are invested in Chinese currency.
- Understand Chinese currency. Unlike the dollar and Euro, Chinese currency (RMB) is tightly controlled by the government. It is not a currency that you can freely buy on the open market. That makes it very difficult for you to buy Chinese currency, unless you live in China. But there are still ways to profit from Chinese currency.
- Buy Chinese currency from Hong Kong. Hong Kong is considered part of China, but it is under very different rules. Chinese currency is available at banks in Hong Kong. You can open up a deposit account and convert your currency to Chinese currency.
- Play with the Chinese stock market. When the value of the Chinese currency goes up, the equity on the Chinese stock market will go up as well. This is by no means a direct play, but it does get exposure to the currency market.
- Buy the USD/RMB futures.You can buy USD/RMB future contracts at the Chicago Mercantile exchange. Future market is complicated and highly volatile; it is by no means for the faint of hearted people. Therefore, you should take caution before investing.
- Looking into a Chinese currency exchange-traded funds. You can invest into an ETF, such as the WisdomTree Dreyfus Chinese Yuan Fund (CYB), in order to invest in Chinese currency. It is an ETF that tracks the money market rate in China and provides exposure to movement between Chinese RMB and USD.
The possibilities are limitless. You should explore all of the possible ways that you can invest or take advantage of the Chinese currency.
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