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koodie
Seeker
Joined: July 08, 2005
Posts: 47
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 Posted:
Mar 30, 2006 - 02:41 AM |
 
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| Post subject: RMB up by 12% Vs USD....at the end of the year????!!! |
Hi guys....i read this article on Bloomberg....what do you think? Should we all trade in some of our USD....
here is the article
Currency Strategists: JPMorgan Says Yuan to Gain 12% This Year
March 27 (Bloomberg) -- The yuan will gain about 12 percent this year as sustained economic growth persuades Chinese policy makers to allow gains in the currency, said JPMorgan Chase & Co.
China's currency has risen 1.1 percent since the government scrapped its decade-long peg to the dollar in July. Powered by record exports and investment in manufacturing, the economy has doubled in size in the past decade, overtaking the U.K. last quarter to become the world's fourth largest.
``It's definitely the case that the yuan is going to be allowed to appreciate as the economy grows,'' said Claudio Piron, a currency strategist at JPMorgan Chase & Co. in Singapore, in an interview March 24. ``We're expecting some good growth.'' The yuan, which traded at 8.0224 today, will advance to 7 against the U.S. dollar by the end of the year, JPMorgan says.
The currency today had its biggest gain in a week as a New York Times report said U.S. Senators Charles Schumer and Lindsey Graham are less likely to push ahead with their proposed legislation to impose punitive tariffs on Chinese imports.
They blame the Chinese government for keeping its currency artificially weak to spur exports, leading to a record $201.6 billion U.S. trade deficit with China last year. China's trade surplus for the period was a record $102 billion. On March 23 Schumer, in China to press for faster appreciation, said the yuan may reach 8 against the dollar by the end of this week.
The People's Bank of China will add flexibility to the exchange rate while keeping the yuan ``basically stable,'' the bank said on March 23. Chinese officials have said they need to change the system gradually to avoid destabilizing the economy.
Trade Surplus
``The consistently elevated level of trade surplus continues to put pressure on officials to allow further yuan appreciation,'' wrote Frank Gong and Grace Ng, Hong Kong-based economists at JPMorgan, in a research note published this month.
The economy grew 9.9 percent in the fourth quarter from a year earlier, after expanding a revised 9.8 percent in the previous three months, the statistics bureau said on Jan. 25.
``As Chinese policy makers get more confident about the sustainability of the economy's strong growth pace, political acceptance for yuan gains will also rise,'' Gong and Ng wrote.
China is under pressure to let the yuan trade more freely before the U.S. Treasury releases a semiannual report as early as April that may accuse the country of manipulating its currency, and before a visit by President Hu Jintao to the U.S.
ABN Amro Holding NV, which forecasts a stronger yuan, recommends investors should use dollar-yuan forward contracts to bet on an appreciation, Tony Norfield, global head of currency strategy at ABN Amro, said in an interview on March 23.
UBS AG, the second-largest trader of foreign exchange, also earlier this month recommended betting on the yen, to benefit from U.S. efforts to pressure China to let its currency rise further. A stronger yuan boosts the purchasing power of Chinese consumers for imports from Japan and other parts of the world. |
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koodie
Seeker
Joined: July 08, 2005
Posts: 47
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Mar 30, 2006 - 02:54 AM |
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GC
The Ginger Prince
Joined: Dec 01, 2003
Posts: 21531
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Mar 30, 2006 - 05:57 AM |
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i invested when the rmb was last revalued, trading between it and GBP. there was a quick buck to be made then but i think anything else in the immediate future will be a lot slower. |
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You turned on the lights, Fuelled U boats by night, That's how you repay us, It's time to go home. |
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koodie
Seeker
Joined: July 08, 2005
Posts: 47
Status: Offline
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Mar 30, 2006 - 11:16 PM |
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so should i trade my USD(not any of use for now) for RMB, since RMB is going to be rising invitably anyways?? |
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peterpaul
Barker
Joined: Jan 27, 2004
Posts: 169
Status: Offline
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Mar 31, 2006 - 12:50 AM |
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A fool and his money are soon parted...
The RMB has appreciated a little more than 1% in about three quarters. While I know most investors are familiar with the old adage past performance is not an indicator of future performance I expect your money will sit in the bank a long time waiting for the rmb to appreciate.
It is not in the short term interest of China to let the RMB increase too much as it would hurt the export market's, well, marketability. Anything that will make their products more expensive on the world market and hasten a push towards Vietnamese/Laotian/Indian made goods that is not in some folks interest around here.
Before you go on about Schumer et al scaring them into re-evaluating...I think that the charm offensive worked. With the possibility of the new Grassley Baucus bill in the Senate to allow the Senate to act tough without the likelihood of a trade war the Senators can say they got tough with China, the Chinese can say we don't bow to foreign pressure, and the game goes on.
A nickel's worth of free advice. Don't try to front run the market, you will get burned in the end... |
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greenmark
Ranter
Joined: July 28, 2005
Posts: 555
Location: Location Location
Status: Offline
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Mar 31, 2006 - 08:45 AM |
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Even if the Yuan appreciates by 12%, then it would really be worthwhile exchanging if you are able to buy and sell RMB at market rates.
Maybe you have that arrangement in buying the currency. However, Chinese banks only buy RMB at a much lower rate than market. If you buy now, have the RMB revalue and sell on, you're likely to have worked quite hard and the main beneficiaries will be the banks.
Anyway, here is another link on the whole macroeconomics of it:
http://www.economist.com/opinion/displaystory.cfm?story_id=6744198 |
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bernie77
Reacher
Joined: Feb 04, 2006
Posts: 227
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Mar 31, 2006 - 09:18 AM |
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There have been so many statements made on this... US investment banks go up to 20%, my bank is more conservative and we say 5%. In any case speculation on a currency like the RMB is hardly worthwhile due to the uncertainty, low interest rates, and as peterpaul mentioned China will ultimately not benefit from raising export prices. Assuming your salary is in RMB, just save some of that and profit from any marginal appreciation on that. Any appreciation will be gradual, not 12% in one go. There are other currencies much more suited for speculation like EUR, JPY or AUD. Also speculate off-shore, Chinese banks give bad rates. |
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rxg
Raver
Joined: Sep 06, 2005
Posts: 446
Status: Offline
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Mar 31, 2006 - 09:39 AM |
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I don't want the RMB rate to go up. I get pay in USD direct deposite into my US bank. I withdraw money in China. If RMI goes up by 12% against USD. Then I need to ask for salary adjustment!!! If RMB worths more, then it is bad for the Chinese economy -- possible less tourists. Many people visit China b/c China is cheap. Everything is expensive in China -- its only cheap for expat who have better exchange rate, and yes, we do make more than the local.
A facial costs 600 RMB. If the exchange rate is 6 RMB to 1 USD -, it 100 USD , then its still too expensive.. |
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yu888
Board Deity
Joined: Jan 25, 2003
Posts: 17971
Location: ZhongShanParkArea SH
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Mar 31, 2006 - 01:57 PM |
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Sorry to say its not what you or I WANT the currency to do, it will happen regardless of our wants. What we need to do is just be well prepared in case of such an increase in RMB value, whether it is hedging with other currencies, or making sure your portfolio is well balances to maximize gains form such and increase while minimizing other risks.
These reports of jumps in value have been going on for years but the reality is the CHinese gov't holds a lot of chips in its coffers with billions in US bonds and quite frankly an amazing source of cheap labor that US businesses actually want o tap. So the US pressure is far more pilitical in nature than it is really about fairness and such. Thus China will likely move on its own schedule, but eventually the RMB will increase in value. For nbow, its based on a "dynamic basket of currencies" theta the Peoples BAnk of China will manipulate to maintain controlled slow growth of currency value. |
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Thoughts & updates about Shanghai On my Blog for more details:Random Thoughts about Living in Shanghai...and more |
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koodie
Seeker
Joined: July 08, 2005
Posts: 47
Status: Offline
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Mar 31, 2006 - 11:36 PM |
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But question is what do I.....I got like this "unneeded" money sitting in Citi bank in SH....and I am there...in SH now. Is there any ways I could invest in US T-billsss or stuff like that in Shanghai. |
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peterpaul
Barker
Joined: Jan 27, 2004
Posts: 169
Status: Offline
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Apr 01, 2006 - 12:14 AM |
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Nope! But if you have serious cajones you can go and buy gold. That is physical gold. There is a bank of communications branch downtown that sells the physical stuff. Not certificates, but the real meal deal. Furthermore, the bank, by law, has to buy it back from you (minus a 1% commission) if you ask them to do so.
The bank sells it at 50 gram intervals, and the service fee to buy is almost nil.
This is only good if you think it will head north of the high 140s a gram it is going for now.
As for what do do with your money you can always buy some crappy 2.25% CDs from HSBC.
Did you think it was gonna be like the west when you moved out here? Jesus...this is one of the most controlled countries on the planet with a serious mistrust of foreigners. I AM NOT SUGGESTING you Make a HK run every few months to change cash over and then invest it in the states. you could piggyback your millions onto the end of an unused daily transfer limit from an outgoing bank but then again if you have that kind of money you are not on this website. |
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GC
The Ginger Prince
Joined: Dec 01, 2003
Posts: 21531
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Apr 01, 2006 - 12:40 AM |
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But controlled countries can be good! When the RMB rate is high and the government openly admits they are going to change the method of currency valuation meaning it will drop in value, is there not a way of making a quick buck as a mentioned before? It happened last year so watch cafefully in case it happens in the future.
As for the current situation, any increase you get will be slow so its definetly worth looking around for other investments as has been mentioned in this thread. |
_________________
You turned on the lights, Fuelled U boats by night, That's how you repay us, It's time to go home. |
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peterpaul
Barker
Joined: Jan 27, 2004
Posts: 169
Status: Offline
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Apr 01, 2006 - 09:55 AM |
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You will be waiting for the other shoe to drop for what? a 3 to 5% gain? You would do just about as good with a CD from an internet bank, or far better with some of the Vanguard mutual funds.
People like Buffett and Soros lose money at the currency game, so you will to...
Or you could do what investing is meant to do, and that is hunker down for the long term. Think in terms of holding for years, not days or months. It is the tortoise, not the hare, that won the race. |
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heavenstation
Seeker
Joined: Mar 06, 2006
Posts: 40
Location: Shanghai------UK Newcastle
Status: Offline
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Apr 03, 2006 - 09:46 AM |
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Rumor Rumor Rumor
American wish RMB rise ASAP such a dream
But the Chinese are not like Japanese, they have more Jetton such as North Korea issue.
Think about that !
China is the Leading Manufactory of the World, the whole economy based on the Export, if the RMB go up the export will collapse |
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kizza08
Ranter
Joined: Mar 15, 2006
Posts: 521
Status: Offline
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Apr 03, 2006 - 12:45 PM |
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funny how speculation can cause absolute pandemonium...... if an economist told ppl to jump of a bridge i think ppl would ... power of knowledge...of lack of.... |
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cynthia2004
Reacher
Joined: May 24, 2005
Posts: 206
Location: Shanghai
Status: Offline
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Apr 03, 2006 - 02:09 PM |
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Rumor Rumor Rumor ! |
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Leave me alone,i am forgotten by GOD. |
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LuckyBen
Lurker
Joined: Apr 02, 2006
Posts: 20
Status: Offline
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Apr 04, 2006 - 08:06 AM |
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rumor. It will never happen within 3 years. |
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Me_Again
Reacher
Joined: Dec 06, 2005
Posts: 304
Location: Lost
Status: Offline
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Apr 04, 2006 - 10:17 AM |
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Like it or not financial markets function on rumors; consider futures; study oil price movements - they're all heavily effected by rumors.
I wouldn't concern myself with a possible rise in the RMB; there's no way it will be revalued by 12%; such a revaluation would almost be disasterous for China's continued growth and have serious effects on some other world economies. A smaller scale revaluation would be more likely.
Of greater concern is an almost certain future fall in the US Dollar; it's only a question of how far will it fall. Do some serious research and you'll notice serious problems with the US economy; massive debt levels for both country and its citizens; a dangerous housing bubble etc. The US is walking a tight rope; yet the same circumstances that contributed to it's current position (rampant consumerism) also have helped fuel China's growth. If Americans can no longer afford to buy, China's exports will drop and any revaluation in the RMB becomes less likely.
You'll notice many major financial institutions and indeed countries are trying to "diversify" their foreign currency holdings which suggests a falling confidence in the US dollar. The US still remains the world reserve currency which is a problem; because if it falls so will most other countries. A major revaluation in the RMB will have a negative effect on the US as it will have to pay more for it's imports; equating to even more debt which will mean less confidence in the currency.
So rumors are as important as facts in world financial markets. |
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We make a living by what we get, we make a life by what we give. - Sir Winston Churchill |
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