China is allowing people in the United States to invest in its currency, the yuan, and it's a good idea to do so, The Wall Street Journal reports.
The Bank of China is letting Americans invest up to $20,000 a year in Chinese yuan, which will reap returns for investors.
First of all, the currency won't weaken — it'll likely strengthen because it cannot get any weaker.
Second, interest rates elsewhere are really low, which makes the yuan a good alternative.
"According to Bankrate.com, the highest-yielding six-month certificate of deposit pays just 1.3 percent, before taxes. The dividend yield on the stock market is 1.7 percent. You can earn better yields from government bonds — the 10-year Treasury is paying 3.3 percent — but that's also subject to federal taxes, and you can put yourself at risk from inflation," The Wall Street Journal reports.
"In these circumstances, the so-called opportunity cost of having some of your money in Chinese currency, at least for now, has rarely been lower."
The strength of the yuan has often been a sore spot in U.S.-Chinese relations, with Washington accusing Beijing of keeping the currency artificially weak in order to gain an unfair advantage in global trade.
President Barack Obama recently met with his Chinese counterpart, Hu Jintao, and stated publicly the yuan needed to strengthen.
"We'll continue to look for the value of China's currency to be increasingly driven by the market, which will help ensure that no nation has an undue economic advantage," Obama says, according to Reuters.
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