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An employee counts Chinese banknotes at a bank in Hefei, Anhui province, in China.
An employee counts Chinese banknotes at a bank in Hefei, Anhui province, in China.
(Jianan Yu/REUTERS)

China to unwind trillion-dollar carry trade

Only a few high-ranking officials at the People’s Bank of China really know what’s happening in the country’s credit markets – and they aren’t talking. It’s entirely possible though, that we are looking at the unwinding of the biggest carry trade in the history of capitalism.

The abrupt change in direction for the Chinese currency – the yuan – is the visible symptom of upheaval in the country’s credit markets. From July, 2012, to Jan. 14, 2014, the yuan appreciated 5.5 per cent against the U.S. dollar.