-- One of Asia’s most lucrative currency trades risks becoming a victim of its own success, according to analysts, with investors blindsided if the market suddenly turns.Borrowing China’s yuan and buying rupees with the proceeds is a top regional play this year. The strategy takes advantage of India’s higher interest rates as officials in both countries keep their currencies in a tight range. Citigroup Inc.
The trade is getting tailwinds from the diverging economic outlooks for the two countries. India is the fastest-growing major economy, the central bank’s main interest rate is at a six-year high and officials are using its war chest of reserves to keep volatility to a minimum. That stands in contrast to China, where growth momentum is lackluster and the real estate sector is still plagued by defaults.
Given weak domestic demand, the currencies of north Asian countries, notably China’s, “will likely stay on the weak side compared to the Indian rupee,” said David Hauner, head of global emerging market fixed-income strategy at Bank of America Corp. “We actually see USD/CNY going quite a bit higher toward 7.45 by the end of the year.”This dividend stock has a strong history of dividend payments and growth, but offers even more for long-term investors. The post This 8.
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