July 29, 2007
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By Wes Goodman - Bloomberg.com
July 30 (Bloomberg) — Investors from Switzerland to California are banking on U.S. Treasury Secretary Henry Paulson convincing China to let its yuan appreciate more than 5 percent in coming months.
Western Asset Management Co. in Pasadena and Pictet Asset Management in Geneva are buying contracts tied to the future value of the yuan, driving the price so high that the currency must strengthen at least 5.5 percent in the next 12 months before they see any profit. The so-called non-deliverable forwards are rising at the fastest pace in two years.
Paulson, in China this week for his fourth visit as Treasury secretary, has failed to convince policy makers that the foreign exchange market should set the yuan’s value. China’s leaders may be more receptive now, after three interest-rate increases since March failed to deflate a stock market bubble or keep inflation from hitting a three-year high. More…
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