The Yuan That I Want

by: Felix Salmon

Jim Rogers has been bullish on China for years, and indeed now has a new book out entitled "A Bull in China: Investing Profitably in the World's Greatest Market". So it's hardly surprising that he sees the country's currency rising. What is interesting is that he seems to be able to simply invest in the yuan:

Jim Rogers, chairman of Beeland Interests Inc., said he is shifting all his assets out of the dollar and buying Chinese yuan because the Federal Reserve has eroded the value of the U.S. currency...
The Chinese currency, known as the renminbi, or yuan, is "the best currency to buy right now," Rogers said. "I don't see how one can really lose on the renminbi in the next decade or so. It's gotta go. It's gotta triple. It's gotta quadruple."

This seems like a good bet to me. Chinese stocks are scary, volatile things, but the currency is massively undervalued and will inevitably rise strongly over the long term. Which just leaves one question: How on earth does one go about buying yuan?

I suspect that it's very difficult, but that it is possible. (Jim Rogers seems to be doing it.) Chinese one-year domestic interest rates are 3.87%, which is high certainly enough to make a yuan investment attractive. So can someone set up an NYSE-traded ETF linked to yuan deposits, giving US retail investors the ability to follow Rogers into China? If you go to, as Rogers advises in his book, you can put your money in a Chinese renminbi money-market account, but annoyingly it pays no interest. Is that the only way to get pure yuan exposure?

(Also via Yves)