NEW YORK (Reuters) - China’s yuan has further to climb against the dollar and could rise by up to 500 percent over the next 20 years, U.S. fund manager Jim Rogers said Tuesday at the Reuters Hedge Funds and Private Equity Summit.
Rogers, who co-founded Quantum hedge fund with billionaire
investor George Soros in the 1970s, urged investors to hold the yuan and said he is “extremely bearish” on the U.S. dollar.
“It’s going to go a lot higher,” he said, adding he holds yuan in two Chinese bank accounts.
He declined to predict where the yuan would trade against the dollar by year-end, but said he expects it to appreciate anywhere from 300 to 500 percent over the next two decades.
The dollar last traded at 7.7325 yuan. It has shed 1 percent so far in 2007 and about 4.7 percent since July 2005, when China widened the band in which the yuan floats.
Rogers said the United States’ transformation from a creditor to a debtor nation and a growing tendency in Washington to embrace tariffs and other anti-free trade policies would decrease investment inflows into U.S. assets.
The administration of George W. Bush has long argued the yuan is undervalued, giving China an unfair trade advantage. Congress has threatened punitive tariffs on Chinese goods.
Last month, the Department of Commerce imposed duties on some Chinese coated paper imports, and on Tuesday, at the World Trade Organization, Washington accused China of piracy and blocking access to U.S. films, books and software.
Rogers said signs that U.S. protectionism was on the rise were “terrifying,” adding “a trade war or a currency war will turn into a mess” and encourage other states to embrace protectionism and possibly lead to a global depression.
Rogers has traveled across China by motorcycle and car and said he plans to move permanently with his family to the Chinese-speaking world — probably to Singapore.
He also holds Chinese stocks and is bullish on commodities, including copper, oil and wheat, largely because the appetite of China and other emerging markets for them means demand will continue to outstrip supply.
“The best way to play China is through commodities,” he said. “If you’re going to invest in China or Asia, invest in something they have to buy.”
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