Whether it be American politicians on the mid-term election
trail, European officials about to deliver yet more pain to
their electorate, or Chinese policymakers defending their right
to set their own fiscal agenda, renminbi (Rmb) appreciation is
a hot topic. At the same time, in Hong Kong, there are calls
for more Rmb-denominated financial instruments (a bond market
would be nice) and Rmb savings are mounting up. It is no
surprise then, that China watchers in the hedge funds industry
are asking themselves what Rmb-related threats and
opportunities these developments present.
Derek Cheung and Chris Ruffle Since China made its foreign
exchange regime more flexible in 2005, the Rmb has appreciated
by approximately 20% against the US dollar. The clamour from
overseas for decisive Rmb appreciation has been noted, but
expectations of a mere 3% to 4% rise in 2010, not a
double-digit number that would mollify the US and...