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Investing in chinese money to us dollars

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This and other major factors, such as preventing domestic inflation in key, imported commodities and decreased interest from outside investors in Chinese equities and bonds, appear to be obliging the PBoC to spend foreign reserves to maintain a floor under the renminbi. In the meantime, the Chinese government is also investing hard currency to maintain stability in the RMB. CFOs obviously play a strategic role in assessing investment opportunities and levels. Among the most obvious factors is that a depreciated currency will likely do more to suppress import levels than to stimulate export levels—which has a direct impact on consumer demand and growth.

In the near-term, even a relatively small shift in currency rates can have a big impact on the bottom line. In the mid- and long-term, it can impact a broad range of investment planning decisions. A weaker currency, for instance, will likely impact pricing on many popular imported products in the China marketplace, especially in contrast to domestic competitors, from smartphones to baby formula to fashion items.

Forecasting the direction of currency exchange rates is particularly challenging in the case of the RMB. First, its trading band is set by the PBoC. And while the offshore version of the renminbi, the CNH, is traded on external markets, the market rate is by no means entirely free. If the CNH becomes much cheaper in US-dollar terms than the onshore version, the CNY, traders will likely buy the currency offshore and sell it on the mainland.

To keep the market-based CNH in relatively close alignment, Chinese leaders already are spending foreign exchange onshore and offshore to maintain a floor under the currency. Some of the factors influencing authorities in China that oversee the exchange value of the currency, include the following:.

But China has a difficult balancing act in terms of how much it is willing to spend to keep the RMB strong. Such an action in and of itself could weaken global sentiment on the RMB and the government-supported institutions that are players in the intervention. There are various indicators that, if monitored together, can be viewed as a planning tool.

One is the actual currency-trading levels in both Hong Kong and Mainland China. Given this fluid and changing environment, now may be a good time to perform a thorough review of how currency is managed at your company. Still, recent shifts in the RMB are important indicators of the potential size of changes that may lie ahead. It is important for CFOs to consider taking stock of their RMB currency holdings, monitoring their currency risks in China on an ongoing basis, and exploring ways to decrease or deploy RMB assets they may be holding in the Chinese mainland.

Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies. Asian and Central Asian centers. The CFO Program brings together a multidisciplinary team of Deloitte leaders and subject matter specialists to help CFOs stay ahead in the face of growing challenges and demands. Back to top. To stay logged in, change your functional cookie settings.

Please enable JavaScript to view the site. Viewing offline content Limited functionality available. My Deloitte. Undo My Deloitte. Save for later. Searching for stability In , China announced the RMB would trade within a band against a basket of major currencies.

Assessing the direction of the RMB Forecasting the direction of currency exchange rates is particularly challenging in the case of the RMB. Mitigating currency risks Given this fluid and changing environment, now may be a good time to perform a thorough review of how currency is managed at your company.

The currency hit a three-year high in offshore markets on Thursday while the U. China's yuan has outperformed against the dollar since mid The widely anticipated dollar weakness gives investors an opportunity to put money to work abroad, said Tocqueville Asset Management portfolio manager John Petrides. He suggested playing the dollar-yuan divide via the VanEck Vectors J. With the yuan now above a multiyear downtrend versus the dollar, China can use its currency's strength to its advantage, said Bill Baruch, the founder and president of Blue Line Capital.

Baruch was especially partial to copper — he owns calls on the underlying commodity — and suggested playing it through mining company Freeport-McMoRan. I think that could break out to the upside. Skip Navigation. Investing Club. VIDEO

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The currency recovered later in the day to stand around 6. In April alone, it posted its biggest monthly drop on record. In the same month, China's foreign exchange reserves fell by the most since late It is a stark turn for the yuan, which was one of the strongest currencies in the world in Read More.

Analysts say a combination of Beijing's Covid restrictions and rate hikes by the US Federal Reserve have made investors wary about keeping their money in China. The country witnessed record outflows from Chinese bonds in February and March. Foreign investors are ditching China. Russia's war is the latest trigger. Lockdowns continue. So far, at least 32 cities in the country remain under lockdown, as President Xi Jinping's government relentlessly pursues its zero Covid policy, which has hit almost every industry and pushed the economy backwards.

Authorities this week tightened Covid restrictions on the country's two most important cities — Shanghai and Beijing — after Xi pledged to "unswervingly" double down on the strict zero-Covid policy. Worries over these restrictions intensified further on Friday when China banned citizens from going overseas for non-essential reasons.

China's balancing act. The central bank has tried to limit the damage. That stemmed the yuan's decline for a few days, but it soon started falling again. There are certainly opportunities in China, but probably at least as many on the down side as on the upside.

My first visit was before the great outsourcing boom of the mid-nineties, so I have seen many changes. First to know is that normal rules of business do not necessarily apply. Sometimes they do with some Western-educated managers, but overall much of the country and economy is run with other factors paramount, many of which have been mentioned: political reasons, respect, glory, collective ego, the need to keep people employed and busy, and many unseen and sometimes puzzling to this Westerner motivations.

And not everything is very obvious. Government and political influence is pervasive and everywhere, including business direction and dealing etc. Decisions are often made for [what we might consider] non-business reasons in mind. The rule of law is very different in China, even business law. Read some English-language blogs on people doing business there to get a feel for things. China Business Blog is a good one. As far as the economy goes, the government maintains strict controls.

Yes, things are booming compared to the US or Europe. I think the anecdote mentioned by JayCeezy in an earlier comment is very telling. Not unusual. Should be a very big red flag for any business person. Another story. A few years ago I saw a documentary on local Beijing TV about some professors at a local university who studied some high rise luxury apartment buildings to see how occupied they were.

They camped out in front and counted how many people went in and out over for days, watched and filmed from afar how many apartments had lights that went on or off, went and knocked on doors, looked at electrical meters, and so on.

Most were purchased for investment. I am not trying to state that all that means that there is a housing bubble or not, or that means a crash is imminent or not. There is of course is a large imbalance in housing. An insatiable demand, and extremely high prices, an many empty new apartments. A recipe for… imbalance. Add to this that the cost of housing is astronomical compared to the average annual salary. To purchase a new apartment in China for the average worker takes people saving their entire lives, even over multiple generations in some cases.

So my point here is that is is just not another place to invest. It is a different world with its own culture, its own rules, and its own eco-system. And just because a company is listed on a US exchange does not make it immune. Do a little web searching and you will find many stories. It just means that many are beyond the reach of US rules and US regulators, at least in the short run.

My point is not whether anyone should or should not invest in China. My point is that one needs to be very careful, very circumspect, and very nimble. In addition there are the usual factors. Currency risk is a big one. While the RMB has appreciated against the dollar, there is no guarantee that things will always go well or that it will be convertible when you need it.

And of course it goes without saying that the tensions between the US and China will only grow worse in the coming years. I could easily see where the US and China could get into more political, financial, and even military confrontations sooner or later. That being said, if a person is happy as a risk-taker and is willing to bet big, then they could do what they feel need to do. If I could give any advice, it would be to keep on learning and reading and studying before making big decisions.

Thanks for your thoughts. Are there any specific things you recommend studying? How have your Chinese investments turned out for you, if any? For learning, you did a major step already, you spend time in China. More than a tour. Just remember, Google is your friend.

Search read learn. Just realize that when in China, the same information is not as available as we are used to in the US. On the other hand, there is information in China about China that we do not get exposed to when not there. Some additional comments to give further flavor to understanding how different China is compared to the West. While one can purchase an apartment in China, the land upon which the building sits is not really owned by whoever purchased it; in reality the land is leased from the government.

After 90 years the land becomes state property again. This is all emanates some socialist thinking about how the State owns the land. So when you see real estate listings about apartments for sale, included is the year the year clock started. From a western point of view, it complicate inheritance, asset planning, etc. All urban dwellers live in apartments, there are very very few and very very expensive single family homes, which were banned in many cities a few years ago.

People who do farming are considered very low class, no urban dweller wants to be caught dead on a farm. There is no suburbia…. Last year we hosted a couple of Chinese business visitors to our plant. After lunch, I had an errand to run at the local home improvement store. When they quizzed me about the pallets of various soil and manure and compost outside the gardening section, I replied that it was soil for the garden. They were dumbfounded.

It is quite a paradox though yes? We buy bottled water too even though we have an endless source of free tap! Were you ever able to get in to these Chinese internet names? Things seem like they are really recovering. Exhibit A-Z is if you watched the chinese listed solar stocks collapse since the subsidies started drying up in and how both those companies and the Chinese govt responded.

Did you catch the 60 minutes episode on the massive cities created in a real estate boom over there that nobody lives in yet? Things like that make me wonder if China is in the start of boom or a massive bust. One light on at 7pm out of 20 apartments etc. This is what I consistently hear from the West. I wonder when the views will change. Perhaps when skeptics actually spend some time in China?

Have you been there? Good advice, and one I can echo. Nice find on Chanos. As a short seller fund, it must have been hard to make money for the past 4 years for him. The credit bubble and local government bubble has been discussed for years now, and yet nothing has happened. The point of my article is that in a command economy, so much can be engineered. However, Chanos tends to be very early with some of his ideas. He made a big deal of being short cable operators Comcast, Time Warner Cable etc..

The same thing could happen with his thesis on China. I bought FXI in the mids during the market implosion of , but sold out in the low 40s in I do, however, keep my eye on U. I remember when the great Julian Robertson closed up his hedge fund in when his performance started to lag and he could not understand the internet craze.

The market then burst and Julian turned out to be right in the end. Unfortunately, Julian was wrong at the time, and being wrong and right at the the time is all that matters. You can be the luckiest and dumbest person on earth, but if you make money, you win.

I would never want to live my life as a prolonged short seller. Hey Sam, How much power would the central government have over controlling a panic sell-off when the real estate bubble in China bursts? I travel to China pretty regularly— about 3 months of the year, and based on discussions with a few locals, a lot of new developments are unaffordable, even for highly skilled workers like factory managers or engineers. These properties are all being bought up by speculators betting on the future.

If wages in China doubled, people could afford these accommodations, but would China still be as attractive for business in that case? Property prices and affordability have been a concern for a long time. There is government housing.

They use property as a way to park their wealth, not even needing to rent their properties out for income. US property is relatively cheap now. Hence, they plan to engineer a managed price decline, and an increase in public housing imo. Do you have any Chinese investments? Seriously, China is kind of perfect for the FS investing style. But it appears FS is going for a particular play with a bigger upside than a broader market. An anecdote: my former employer had a contract in China to build a complex highway interchange.

This wiped out the profit for my former employer. The agency suggested cutting back on inspection and material cost. This was in , and somebody got that contract and did it for the deal proposed. I would not want to drive that highway. Well at least someone got rich! Skimming off the top is the emerging market, command economy way. Less checks and balances thank you very much!

Sam, is this a change in position? I thought you were risk adverse! Did I read that right? In addition, it is invested in index mutual funds.

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Gravitas Plus: Does the Yuan pose a threat to the U.S. Dollar?

Find the current US Dollar Chinese Yuan rate and access to our USD CNY converter, charts, historical data, news, and more. Find the current Chinese Yuan US Dollar rate and access to our CNY USD converter, charts, historical data, news, and more. Investors can take positions in the yuan by opening a savings or deposit account with U.S. dollars, but the account is denominated in yuan.