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Monday, March 31, 2014

Speculators Get Fingers Burned in China

Speculators have been borrowing dollars to buy Chinese assets (aka the "carry trade"). They are gambling that the yuan will strengthen. However, the gamble has not paid off because (as per the Telegraph) the yuan has fallen 2.5% against the dollar since January.

The situation will be exacerbated as the US Federal Reserve brings forward plans to raise interest rates. 

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