“there is no fundamental advantage to borrowing or lending in one currency over another.”
My reponse:
If you really believe THAT, then I’m now starting to completely lose respect for you.
What do you think George Soros would reply to your quote, a man who proved that quote wrong and also made BILLIONS for himself and his hedge fund investors in the currency markets.
My wife and I bought an investment property in China because we not only wanted our money out of dollars and into RMB, we also wanted some leverage which we got to the tune of 5X through a 20% down mortgage from a Chinese bank.
Since we did that a few years ago, the RMB to $ exchange rate has moved 20% in our favor, moving in the direction that anyone with any economic common sense knew it would. And it has much much farther to move. There IS advantage in many situations to borrowing in another currency, particularly when you are economically sharp enough to look at global economics and predict future monetary flows driving currency rates.
I know plenty of smart people who are buying CD’s in RMB from Chinese banks. Smart move. The rate is lower, but when combined with the RMB vs $ exchange rate moves, it works out well.
