By Judy Chen
Feb. 6 (Bloomberg) -- Morgan Stanley said investors should “take profit” on the yuan’s three-month non-deliverable forwards as they head for the biggest weekly advance in more than eight months.
“We prefer to move to the sidelines now and reassess at a later date,” the bank said in a report dated yesterday.
It recommended buying the contracts on Jan. 8, when they indicated the yuan would weaken 1.1 percent to 6.91 per dollar. They recently showed traders were betting on a 0.4 percent drop to 6.8650. The contract strengthened 0.9 percent so far this week.
Forwards are agreements in which assets are bought and sold at current prices for delivery at a later specified time and date. Non-deliverable contracts are settled in dollars.
To contact the reporters on this story: Judy Chen in Shanghai at xchen45@bloomberg.net
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