Andy Mukherjee of Bloomberg has recently written an opinion piece highlighting the recent
recommendations on the Yuan Carry trade made by an investment bank, which if implemented, has an impact on the Indian fx markets too.
Surprisingly, since the recommendation surfaced, the trade has become even more attractive with the cost of shorting yuan remaining more or less static while the rupee forward premia implied interest rate based on the NDF forwards has moved higher reflecting an increased rate of return.
The world is, surely, changing in increasingly unthought of ways. Who would have thought a highly controlled currency of a growing economy could be used to execute carry trades?
(Link via email from E N Venkat of Lazard India)