ExpatOilWorker Posted August 18, 2011 Share Posted August 18, 2011 Imagine you are an International Bank take a $1 billion loan at 0.25% in the US, convert the loan to Chinese Yuan ($=6.39 Yuan August 18, 2011). Then you invest the 6.39 billion Yuan at 3.5% for 12 month (=6.61 billion Yuan). Wait 1 year and convert back to US-$, at lets say $=6.00 Yuan (reading from past trend http://www.google.com/finance?q=USDCNY), and u now have $1.102 billion or a $102 million profit in 1 year. There is nothing new in currency carry trade, but as we have seen with the Japanese yen carry trade, nothing last forever and if you play it too long the market will take revenge. So what will stop the above Chinese carry trade? 1. US interest rate goes up and Chinese interest goes down. VERY VERY unlikely as the Chinese need high interest rates to tame inflation. 2. That only leave the US-$/Yuan exchange rate. At the moment the US is pushing the Chinese to strengthen the Yuan and the media are let us to believe that WILL happen. Short term, I think the Yuan will get stronger, but long term it will get weaker and actually benefit the US. How is that then? Well, the exchange rate is not so important, what matters is the underlying value/cost behind the currency. If China has a 20% Vietnam style inflation the exchange rate can still go to $=9.00 yuan and at the same time being stronger to the US-$ (as goods, services and salaries increase in yuan in China). Thailand started the 1997 Asian Financial Crises, but this time I think China will be the center of the 201X Asian Currency Crises, but Thailand get dragged into it. In short if you are hurting now when the $ is a 29.9 baht, keep your cool, wait is out and soon (years!) we will again see weaker Asian currencies. Does it make sense? Any comments? Link to comment Share on other sites More sharing options...
Bengt Posted August 18, 2011 Share Posted August 18, 2011 Will wait and see if somethings going to happend with the asian currencies, the THB cannot keep the recent level in the long term. Link to comment Share on other sites More sharing options...
Naam Posted August 19, 2011 Share Posted August 19, 2011 In short if you are hurting now when the $ is a 29.9 baht, keep your cool, 1. wait it out and soon (years!) we will again see weaker Asian currencies. 2. Does it make sense? 3. Any comments? 1. years? 2. no, it does not. 3. Asian economies are in a different shape than they were in 1997. a comparison is not warranted. Link to comment Share on other sites More sharing options...
Naam Posted August 19, 2011 Share Posted August 19, 2011 Will wait and see if somethings going to happend with the asian currencies, the THB cannot keep the recent level in the long term. please give us a valid reason why not. Link to comment Share on other sites More sharing options...
jalansanitwong Posted August 19, 2011 Share Posted August 19, 2011 (edited) You cant compare USA to Asia. Asia took its medicine after 1997 and still is to an extent. Things are looking good here in Asia. America is a sick joke. They refused to take their medicine after the 2008 crash and theyre back wheeling and dealing with the US taxpayers underwriting their gambling habit. Wall st is just a casino with no regulations to adhere to. America keeps on priinting bonds (IOU,s) and dollars. Their currency is going nowhere. Edited August 19, 2011 by jalansanitwong Link to comment Share on other sites More sharing options...
Soutpeel Posted August 19, 2011 Share Posted August 19, 2011 "ExpatOilworker".......what wrong. ?.... down time offshore and the only channel you get on the TV is Bloomberg ?.... Link to comment Share on other sites More sharing options...
ExpatOilWorker Posted August 19, 2011 Author Share Posted August 19, 2011 "ExpatOilworker".......what wrong. ?.... down time offshore and the only channel you get on the TV is Bloomberg ?.... No down time, I just get paid too much, so I have to invest and think about the future...... Link to comment Share on other sites More sharing options...
Thailand Posted August 19, 2011 Share Posted August 19, 2011 "ExpatOilworker".......what wrong. ?.... down time offshore and the only channel you get on the TV is Bloomberg ?.... No down time, I just get paid too much, so I have to invest and think about the future...... I have the perfect way to make you a small fortune. Give me a large fortune and I will invest it for you. :jap: Link to comment Share on other sites More sharing options...
ExpatOilWorker Posted August 20, 2011 Author Share Posted August 20, 2011 "ExpatOilworker".......what wrong. ?.... down time offshore and the only channel you get on the TV is Bloomberg ?.... No down time, I just get paid too much, so I have to invest and think about the future...... I have the perfect way to make you a small fortune. Give me a large fortune and I will invest it for you. :jap: Thanks Thailand, Lets open a non-alcoholic pub with vegitarien food. If there is not enough customers, then we just increase prices or charge a cover charge to get in. That should be a sure bet to lose a bit of cash..... Link to comment Share on other sites More sharing options...
ExpatOilWorker Posted September 28, 2011 Author Share Posted September 28, 2011 In short if you are hurting now when the $ is a 29.9 baht, keep your cool, 1. wait it out and soon (years!) we will again see weaker Asian currencies. 2. Does it make sense? 3. Any comments? With the Baht at 30.8 to the US-$, it looksa like I was right after all. Link to comment Share on other sites More sharing options...
Naam Posted September 28, 2011 Share Posted September 28, 2011 In short if you are hurting now when the $ is a 29.9 baht, keep your cool, 1. wait it out and soon (years!) we will again see weaker Asian currencies. 2. Does it make sense? 3. Any comments? With the Baht at 30.8 to the US-$, it looksa like I was right after all. a 2% fluctuation doesn't mean anything. other currencies lost much more during the last two weeks because of risk aversion and flight into USD. Link to comment Share on other sites More sharing options...
ExpatOilWorker Posted January 12, 2012 Author Share Posted January 12, 2012 With the Baht at 31.78 to the US-$ (Jan 2012), I guess we are beyond any fluctuation.... Link to comment Share on other sites More sharing options...
bendix Posted February 3, 2012 Share Posted February 3, 2012 With the Baht at 31.78 to the US-$ (Jan 2012), I guess we are beyond any fluctuation.... With the Baht back around 30.8 (early Feb 2012) I guess we are not. I simply can't understand why people assume the key Asian currencies are going to be weaker. I remember cdnvic used to join any currency related thread and post that the baht will hit 40 again within six months. This was when the baht was around 29-31 (sound familiar), and he was making those posts 3-4 years ago. Sorry people. The days of a strong US$ to Baht are long gone, never to be seen again. You might see 35 perhaps, but never 40, and I'm comfortable predicting 28 is more likely that 35. People are investing in Asia, not the US and Europe. To do that they are buying Asian currencies and sellng western currencies. It's very very simple. Link to comment Share on other sites More sharing options...
fletchsmile Posted February 3, 2012 Share Posted February 3, 2012 "ExpatOilworker".......what wrong. ?.... down time offshore and the only channel you get on the TV is Bloomberg ?.... No down time, I just get paid too much, so I have to invest and think about the future...... Can't help thinking that if you really had been paid too much, then 1) you wouldn't need to be working 2) you'd have enough money so you weren't worried about investing and thinking about your financial future As to "Does it make sense? Comments?" One of many many possibilities. No harm in thinking what if, but wouldn't like to follow your scenario. For me, more likely scenario and longer term trend: Asia becoming more important and Asian currencies generally strengthening Link to comment Share on other sites More sharing options...
monty1412 Posted February 3, 2012 Share Posted February 3, 2012 "ExpatOilworker".......what wrong. ?.... down time offshore and the only channel you get on the TV is Bloomberg ?.... No down time, I just get paid too much, so I have to invest and think about the future...... Gold and silver my man.. thats the currencies that will stand test of time and gold is on a march this year. And yes i have my money where my mouth is.. in fact on paper today made around US20K on my gold options.... Link to comment Share on other sites More sharing options...
.png.3b3332cc2256ad0edbc2fe9404feeef0.png)
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now