Profiting from a renminbi revaluation
REAL-LIFE PROBLEMS, INNOVATIVE SOLUTIONS
BACKGROUND: Market speculation on a shift in China’s exchange rate regime, and a revaluation of the Chinese renminbi (RMB), is again growing. The problem is that the most direct way of playing this – the non-deliverable forwards (NDF) market – is outside the remit of many asset managers. Moreover, there is already a very large premium in China NDFs, suggesting much is already in the price. We look for options strategies to play a China revaluation within a G-10 FX portfolio.
PROBLEM: G-10
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