Investment Guru Buys Up Yuan!

Oct 25, 2007

Investment guru to dump US dollars, amass yuan

FEARLESS FORECAST: 'It's the official policy of the central bank to debase the currency. The US dollar has been the world's medium of exchange. That's in the process of changing. ' - MR ROGERS, who correctly predicted the commodities rally in 1999

AMSTERDAM - INVESTMENT guru Jim Rogers is moving all his assets out of the dollar and buying Chinese yuan because the United States Federal Reserve has eroded the value of the US currency.

'I'm in the process of - I hope in the next few months - getting all of my assets out of US dollars,' said Mr Rogers, 65, who correctly predicted the commodities rally in 1999. 'I'm that pessimistic about what's happening in the US.'

Mr Rogers, chairman of Beeland Interests, delivering a presentation late on Tuesday at an investors' meeting organised by ABN Amro Markets in Amsterdam, said he expects the Chinese currency to quadruple in the next decade.

He added that he is holding on to commodities, such as platinum, gold, silver and palladium.
Since the Fed lowered US interest rates on Sept 18 - the first cut in four years - the dollar has fallen 2.8 per cent against the euro and touched a record low on Tuesday. Gold rose to a 27-year high, and platinum jumped to a record.

'It's the official policy of the central bank and the US to debase the currency,' said Mr Rogers, a former partner of billionaire investor George Soros.

'The US dollar is and has been the world's reserve currency, the world's medium of exchange,' he said.

'That's in the process of changing. The pound sterling, which used to be the world's reserve currency, lost 80 per cent of its value, as it went through the whole period of losing its status as the world's reserve currency.'

The Chinese currency, known as the renminbi or yuan, is 'the best currency to buy right now', Mr Rogers said.

'I don't see how one can really lose on the renminbi in the next decade or so. It has got to go. It has got to triple. It has got to quadruple.'

The yuan strengthened past 7.5 to the dollar yesterday for the first time since China's central bank ended a fixed exchange rate in July 2005.

The currency has gained 10.5 per cent since the dollar link was abandoned.

China, growing faster than any other major economy, is 'going to be the most important country in the 21st century', Mr Rogers said.

China's gross domestic product expanded 11.9 per cent in the second quarter.

The bull markets in bonds and stocks are 'over', he said.

'Bonds will be a terrible place to be for many years and will, in fact, be going down for many years.'

Mr Rogers said he remains bullish on commodities because 'that's where the big fortunes are going to be made in the world in the next five or 10 or 15 years. The current bull market is going to last until sometime between 2014 and 2022'.

Commodity prices have surged, as demand for raw materials, especially from China, rose faster than producers were able to increase output.

BLOOMBERG NEWS : Source: The Straits Times