Oanda has a usd/cny cross which u can actually trade. I doubt u can make any serious money long CNY given the interest differential.
I have held Yuan and Swiss Francs with them for over a year. When my dollars were converted into these currencies I got murdered on the exchange rate--a rate much worse than what was quoted on, say, Yahoo finance. The Yuan appreciated steadily against the dollar, but it took about six months to even break even in the account, all because of the initial exchange rate. When I converted my Swiss Francs recently into Yuan (tipped off by an article in The Asia Times), guess what? They converted my CHF to dollars, then my dollars into Yuan--both times at rates worse than quoted in the financial press. BTW I don't think they offer a Yuan CD or any kind of interest bearing account denominated in Chinese currency. You just pay the murderous spread and hold the Yuan in a 0% interest account.
Wouldn't the expected Yuan appreciation already be reflected in the futures premium? The expected outcome of holding such a futures contract by itself would be zero. That being said, there was an interesting article in the Asia Times about the possibility of a huge, mostly unexpected gain in the Yuan vs the dollar. (See the last paragraph headed "What Will Happen.") http://www.atimes.com/atimes/China_Business/IE12Cb04.html
No, that is wrong. If the renminbi appreciates then so will a contract that represents X renminbi that you paid X dollars to own. Currency futures track exchange rates, as you would expect.
No, that's the difference between futures and underlying. Once you remove interest rates, the expected value of holding any, and I mean any, futures contract is zero. Right now: YuanDollar = .13045 CME YuanDollar July07 futures = .131545 The futures converge to cash, hence a .84% appreciation of the Yuan vs the dollar in the next couple months is already built into the price. That is, the Yuan must appreciate by more than .84% by July for your futures contract to be profitable at expiration. Don't get mad dude, I'm just a PhD in economics--ie pathetic loser of sorts.
The expected value is not zero if you EXPECT the exchange rate to change. Say, what's the expected value of a PhD in economics? There is a 3% difference between spot and the May '08 contract. A 4.5% return in T-bonds and with no exchange fluctuation puts the account "ahead" 1.5% after a year. The problem is what happens with the leverage I would want in a speculative yuan position, considering the trading band. With 5x leverage and no exchange rate change, the account is negative 10.5% after 1 year (4.5 - (3 * 5)). In this scenario the yuan would have to appreciate ~2% to break even, so it's a matter of whether that is a good bet.