‘As Reliable As Gold’: About That ‘Other’ Safe Haven…

Earlier this month, a couple of days after Donald Trump’s Pulp Fiction-esque ‘fire and fury’ moment…


we suggested that maybe you’re looking at the wrong “fear gauge.”

Given that…

  • the yuan has begun to trade like a high-yielding safe haven and;
  • given the fact that even in the absence of fresh provocations from Pyongyang, South Korean assets are probably due for a pullback on the heels of a flood of inflows tied to EM euphoria in the first half of the year;

… CNYKRW could well turn out to be a pretty good proxy for market angst.

Fast forward to Tuesday and sure enough, CNYKRW is having its best day since the Gary Cohn rumor rattled markets and its second-best day since the aftermath of “fire and fury”:



Here’s Bloomberg’s Mark Cranfield:

CNY/KRW continues to be a good alternative haven play for investors who are focused on Asian markets. Yuan strength during periods of North Korea related turmoil is becoming as reliable as the demand for yen or gold. The cross still hasn’t reached its January high around 174, so it won’t be facing technical resistance for a while yet. And while the PBOC won’t be happy for investors to see the yuan as a one-way bet, that’s not something to be seriously concerned about until USD/CNY is below 6.60.

There you go. “As good as gold.”

Your safe havens are now made in China too.




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