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riverboy
Joined: 03 Jun 2003
Location: Incheon
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 Posted: Mon May 24, 2010 5:02 pm Post subject: So... Why Not Buy Yuan? |
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Ok. I don't claim to be the brightest buld on the X-mas tree here folks, but I try to keep an eye on things world wide and I follow the economic situation pretty closely -many thanks to some of the posters on this board.
So, my question: if the Chinese Yuan is so undervalued, is it not a pretty certain bet that if I bought a bunch of it, I would stand to make a pretty healthy profit? |
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The Happy Warrior
Joined: 10 Feb 2010
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| Posted: Mon May 24, 2010 5:59 pm Post subject: |
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The Yuan is pegged to the dollar right now, but its a fairly safe bet that it'll be allowed to float in a band within the next 3 months or so. I'm basing this off of the consensus of China experts.
And yes, the Yuan is likely undervalued by at least 25%.
But, my understanding of currency arbitrage is that its best to have three currencies to pull it off. So, if the yuan is your middle currency, figure out what currency you're starting with, and then which currency you'll eventually trade the yuan for. I've never done currency arbitrage, though. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Mon May 24, 2010 7:43 pm Post subject: |
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| I don't know if the currency is over/under/properly valued. Andy Xie reckons it is either properly or slightly over valued. Speculating on currency moves is near impossible. |
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Jane
Joined: 01 Feb 2003
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| Posted: Mon May 24, 2010 8:42 pm Post subject: |
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As far as I know, non-Chinese can't buy Yuan outside of China. They even have a separate stock market for foreigners in Shanghai, a different one from the one the Chinese can invest in.
Arbitrage is usually done with 3 currencies, and is done on a very short time limit (i.e., day to day). You can still make money off playing the FX market, no doubt, and I know people who did last year with the USD and the KRD when the won sunk vis-a-vis the USD. |
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Mr. Pink
Joined: 21 Oct 2003
Location: China
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| Posted: Mon May 24, 2010 8:48 pm Post subject: |
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| Want to buy Yuan? Go to Myungdong and hit the money changers. Use Won and buy Yuan. When it does go crazy and you are rolling in the money, change it to Won or US dollars at those same money changers. They use 4 currencies atm: Yen, Yuan, US $ and Won. I brought 20k Yuan in with me at Xmas and got a very good rate. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Tue May 25, 2010 6:07 am Post subject: |
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| As far as I know, non-Chinese can't buy Yuan outside of China. |
I believe it is possible to buy 50k USD in RMB every x months. Don't remember the details. Jim Rogers in his book A Bull in China goes into detail about it. |
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Jane
Joined: 01 Feb 2003
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| Posted: Tue May 25, 2010 9:49 am Post subject: |
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Here's some info on acquiring RMB from a Jim Rogers article a year ago:
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But he adds that he doesn't understand why China has a blocked currency. Currently, there are restrictions on money leaving or entering the country and as such, the renminbi is not fully convertible.
"China has not made many serious mistakes in the past two to three decades but this is one of them. I don't know why they still have a blocked currency. This is not 1979, it�s not even 1999. It's 2009 and China doesn't need to do that any more," Rogers says.
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http://www.cnbc.com/id/30836189/Buy_Yuan_and_Beware_of_Boys_Rogers_Tells_His_Daughters
I guess we are both kind of right.
Anyone have any info on exactly what are the restrictions or if they have been lifted since this article was published?[/quote]
A quick google search found this, a RMB account at HSBC:
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| HSBC provides you with diversified and convenient cross-border Renminbi banking services, so that you can benefit from the strengthening economic links with mainland China. |
http://www.hsbc.com.hk/1/2/hk/banking/rmb
The question is, do you really want to keep your fortune in paper? |
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rollo
Joined: 10 May 2006
Location: China
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| Posted: Tue May 25, 2010 3:05 pm Post subject: |
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| currency speculation is madness! But a few years ago I made a very nice profit buying yuan and later exchanging it for dollars. they are going to let it appreciate late this summer. |
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riverboy
Joined: 03 Jun 2003
Location: Incheon
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| Posted: Wed May 26, 2010 4:34 pm Post subject: |
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| The question is, do you really want to keep your fortune in paper? |
The answer is,(drumroll please)........... if it will make me rich. YES!
Seriously though. I just think it's bound to go up sooner or later and when it does, sell and buy something more stable. Perhaps my wife will finally be convinced that I'm not crazy and let me buy silver. |
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Sector7G
Joined: 24 May 2008
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| Posted: Wed May 26, 2010 6:18 pm Post subject: Re: So... Why Not Buy Yuan? |
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| riverboy wrote: |
Ok. I don't claim to be the brightest buld on the X-mas tree here folks,
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Ha ha I know it was just a typo but...........
Anyway, interesting thread! Food for thought. |
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riverboy
Joined: 03 Jun 2003
Location: Incheon
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| Posted: Wed May 26, 2010 9:47 pm Post subject: |
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riverboy wrote:
Ok. I don't claim to be the brightest buld on the X-mas tree here folks,
Ha ha I know it was just a typo but...........
Anyway, interesting thread! Food for thought. |
Hhehehehehe no doubt! Yes, my typing and proofreading skills are severely lacking as well.
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Jane
Joined: 01 Feb 2003
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| Posted: Thu May 27, 2010 8:00 am Post subject: |
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| riverboy wrote: |
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| The question is, do you really want to keep your fortune in paper? |
The answer is,(drumroll please)........... if it will make me rich. YES!
Seriously though. I just think it's bound to go up sooner or later and when it does, sell and buy something more stable. Perhaps my wife will finally be convinced that I'm not crazy and let me buy silver. |
If you are going to buy silver, wait for a day or two before options expiry day. Last week, the banksters held down the price of silver and gold a few cents below the strike price just so the options would expire to prevent having to carry out delivery of physical metal.
Silver is a smaller market than gold and as a result, more easily (and heavily) manipulated. I still think it's worth a dabble in though. |
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