USD/CNY carry trade? | Forex Factory

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USD/CNY carry trade?

  • #1
  • First Post: Jan 23, 2010 11:44am Jan 23, 2010 11:44am
If China does raise rates, wouldn't the USD/CNY become the ultimate carry trade? Since the yuan is pegged to the dollar, there is no downside risk and if it were to become unpegged, the dollar would lose value compared to the yuan. Please let me know if/why my thinking is off and it couldn't be this easy. Thank you.

*Is there a good place to find a currency pair interest calculator? I tried Oanda's, but it clearly doesn't work because it gave me the same return for being long and short the same pair.
  • #2
  • Jan 25, 2010 6:45pm Jan 25, 2010 6:45pm
Quoting fsufootball42
If China does raise rates, wouldn't the USD/CNY become the ultimate carry trade? Since the yuan is pegged to the dollar, there is no downside risk and if it were to become unpegged, the dollar would lose value compared to the yuan. Please let me know if/why my thinking is off and it couldn't be this easy. Thank you.

*Is there a good place to find a currency pair interest calculator? I tried Oanda's, but it clearly doesn't work because it gave me the same return for being long and short the same pair.
if its giving you the same on oanda you need to click the trade button not the balance button.
  • #3
  • Jan 25, 2010 7:02pm Jan 25, 2010 7:02pm
-$1.7808 per $100,000 for shorts
-$7.8575 per $100,000 for longs

This is what I was charged on FXGame today. Not my best carry pair. ;-)
  • #4
  • Jan 25, 2010 7:12pm Jan 25, 2010 7:12pm
Quoting dr_zeus
-$1.7808 per $100,000 for shorts
-$7.8575 per $100,000 for longs

This is what I was charged on FXGame today. Not my best carry pair. ;-)
wow
they must have a high cost to carry on oanda i know with the other pairs they charge to allow the carry.. maybe cause its china they charge so much it negates the carry.. weird
  • #5
  • Jan 30, 2010 11:53pm Jan 30, 2010 11:53pm
Quoting dr_zeus
-$1.7808 per $100,000 for shorts
-$7.8575 per $100,000 for longs

This is what I was charged on FXGame today. Not my best carry pair. ;-)


This happens because CYN is fixed to the USD without the interest rate being fixed? Any other brokers allow this to be exploited?
  • #6
  • Sep 29, 2010 12:31pm Sep 29, 2010 12:31pm
Quoting dr_zeus
-$1.7808 per $100,000 for shorts
-$7.8575 per $100,000 for longs

This is what I was charged on FXGame today. Not my best carry pair. ;-)
just looked on oanda, the interest rate is negative to both borrow and lend for the CNY
  • #7
  • Last Post: Edited 1:22pm Dec 7, 2011 1:11pm | Edited 1:22pm
Quoting upod1mm
just looked on oanda, the interest rate is negative to both borrow and lend for the CNY
You sure of this? I checked this out about 2 months ago. Positive carry if you are long CNY.

Some of the other brokers such as FXDD does not give a positive carry.
However, the RMB is not fixed to the dollar. The Peg moves every week. It in fact moves and currently is the faster appriciating currency of any developing nation. So in addition to the carry trade you are likely to make some as the RMB appreciates.

Problem with Oanda is the spreads are 100 pips and they go up to 500 on the weekend.

Checked it out again. If you have 100,000 USD worth of CNY you should make about $10 a day or about 365 a year. If you do this with leverage of 5X then you should make about $50 a day.
Kill the ego, or it will kill the mission.
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