Wrong Turn Posted February 16, 2011 Share Posted February 16, 2011 I have Baht and USD, but some have recommended buying Chinese RMB, thinking this currency will appreciate. Do you think this is a good idea, as a way to diversify? Any responses are appreciated. Link to comment Share on other sites More sharing options...
Naam Posted February 16, 2011 Share Posted February 16, 2011 did those "some who recommended to buy" tell you that you can't hold CNY except in a Hong Kong bank account? Link to comment Share on other sites More sharing options...
Wrong Turn Posted February 16, 2011 Author Share Posted February 16, 2011 ^ Naam, this may sound odd, but I was thinking of just keeping the cash RMB at home. Link to comment Share on other sites More sharing options...
Naam Posted February 16, 2011 Share Posted February 16, 2011 ^ Naam, this may sound odd, but I was thinking of just keeping the cash RMB at home. it doesn't sound odd, it sounds buy some chinese currency from a bank or money changer. go to another one and sell for any currency what you bought. take a pocket calculator to figure out how many years you have to wait for an estimated overly optimistic appreciation of 5% p.a. then sit quietly in a corner and Link to comment Share on other sites More sharing options...
roc634 Posted February 17, 2011 Share Posted February 17, 2011 A lot of people have made numerous money already. The dollar-yuan exchange rate was1:8.7 and 3 years later is was 1:6.5 Link to comment Share on other sites More sharing options...
Naam Posted February 17, 2011 Share Posted February 17, 2011 A lot of people have made numerous money already. The dollar-yuan exchange rate was1:8.7 and 3 years later is was 1:6.5 a lot of people claim they made money. and a lot of people made and still make false statements as you just did. the exchange rate USD/CNY (the latter is the international code for the Chinese currency) was 8.28 thirteen years ago. three years ago the rate was 7.35 (not 8.7). in the meantime CNY has appreciated to 6.58, i.e. if somebody has bought CNY against USD 13 years ago he made the pittance of linear 2.15% per annum, actual yield not taken into consideration and neither is the loss buy/sell cash considered. the bottom line says loss! using the appreciation of the last three years (7.35 / 6.50) the result is linear yield 3.85% per annum, again ridiculously low even if other profit reducing circumstances (see above) are not considered. and here's the evidence: Link to comment Share on other sites More sharing options...
Naam Posted February 17, 2011 Share Posted February 17, 2011 ^ Naam, this may sound odd, but I was thinking of just keeping the cash RMB at home. did i convince you these are not good thoughts you were thinking Wrong Turn? or do i have to write an extensive paper exclusively for you? Link to comment Share on other sites More sharing options...
el jefe Posted February 17, 2011 Share Posted February 17, 2011 A lot of people have made numerous money already. The dollar-yuan exchange rate was1:8.7 and 3 years later is was 1:6.5 First, I'd like to know HOW a lot of people profited by investing in CNY. As Naam points out, that's very difficult to do. Second, How do you make numerous money? Third, take Naam's advice. Link to comment Share on other sites More sharing options...
Naam Posted February 17, 2011 Share Posted February 17, 2011 How do you make numerous money? you take a bundle of one thousand one-dollar notes and number them. as simple as that Link to comment Share on other sites More sharing options...
Naam Posted February 17, 2011 Share Posted February 17, 2011 A lot of people have made numerous money already. The dollar-yuan exchange rate was1:8.7 and 3 years later is was 1:6.5 First, I'd like to know HOW a lot of people profited by investing in CNY. As Naam points out, that's very difficult to do. Second, How do you make numerous money? Third, take Naam's advice. there is a way to participate in the hype of CNY appreciation namely by so-called NDFs (Non Deliverable Forwards). they are freely available for non-residents of China and Hong Kong. presently a USD/CNY NDF yields a bit less than 3.5% p.a. and perhaps a tad more if Obama, Geithner, Bernanke or some senators have a real big mouth. over the years i have used NDFs several times when hedging my exposure in a restricted currency (e.g. BRL - Brazilian Real). by the way, "freely available" might not be the correct expression because NDFs generally require a minimum investment of 500,000 US-Dollars, in some cases even 1 million (both amounts not exactly pocket money!). Link to comment Share on other sites More sharing options...
Wrong Turn Posted February 18, 2011 Author Share Posted February 18, 2011 Thanks for the replies folks, and I respect your opinions. The RMB would be a hedge. I am also thinking of buying USD. Link to comment Share on other sites More sharing options...
Madivad Posted February 18, 2011 Share Posted February 18, 2011 I am also thinking of buying USD. Your thinking is the USD will pickup in the near future? I think youll be holding it a while. Just my own speculation, but I don't see it changing anytime soon and I think it has more to lose yet. Q: how do you make a small fortune in Thailand? A: start with a big one Link to comment Share on other sites More sharing options...
Naam Posted February 18, 2011 Share Posted February 18, 2011 Thanks for the replies folks, and I respect your opinions. The RMB would be a hedge. I am also thinking of buying USD. there are a few (very few) internationally tradeable offshore bonds, denominated in CNY, available. Caterpillar emittet one last nmovember. but the emission volumes are extremely low (values each USD150-250mm) and the yields are of course low too. Link to comment Share on other sites More sharing options...
fletchsmile Posted February 18, 2011 Share Posted February 18, 2011 (edited) Perhaps a bit complicated for Naam's father's first born, but CNH may be worth you exploring and keeping your eye on: This is an offshore version of CNY/RMB. Google it and find links like: http://www.financeasia.com/News/246126,cnh-becoming-de-facto-new-currency-in-hong-kong.aspx http://www.svb.com/blogs/mark_noble/china-currency-going-global/ http://www.emergingmarkets.org/Article/2682677/CHINA-CURRENCY-Code-red.html In addition there are also RMB denominated bond funds out there as well. They are small in number and tend to get offered to Private Banking clients so you're talking high entry levels. For general reading I would suggest HSBC's paper from Dec 2010: http://www.research.hsbc.com/midas/Res/RDV?p=pdf&$sessionid$=-milkoY0zXS6xjTs3qghHdp&key=UHa14N6Tu3&n=282753.PDF Edited February 18, 2011 by fletchsmile Link to comment Share on other sites More sharing options...
Naam Posted February 18, 2011 Share Posted February 18, 2011 Perhaps a bit complicated for Naam's father's first born, but CNH may be worth you exploring and keeping your eye on.. indeed a perfect solution for Wrong Turn! i have been told CNH can be stored easily in the attic View PostWrong Turn, on 2011-02-16 21:47:17, said: ^ Naam, this may sound odd, but I was thinking of just keeping the cash RMB at home. Link to comment Share on other sites More sharing options...
steve2550 Posted February 20, 2011 Share Posted February 20, 2011 a lot of people claim they made money. and a lot of people made and still make false statements as you just did. the exchange rate USD/CNY (the latter is the international code for the Chinese currency) was 8.28 thirteen years ago. three years ago the rate was 7.35 (not 8.7). in the meantime CNY has appreciated to 6.58, i.e. if somebody has bought CNY against USD 13 years ago he made the pittance of linear 2.15% per annum, actual yield not taken into consideration and neither is the loss buy/sell cash considered. the bottom line says loss! using the appreciation of the last three years (7.35 / 6.50) the result is linear yield 3.85% per annum, again ridiculously low even if other profit reducing circumstances (see above) are not considered. and here's the evidence: I am confused: your graph shows the CNY starting to seriously gain against the USD in mid 2005 (which is correct AFAIK), so why the emphasis on 13 years? Do you want to point out that the CNY/USD rate can stay put for extended periods of time? What puzzles me about the CNY/THB exchange rate is the large difference between selling and buying RMB notes: about 3 THB/RMB vs. 5 THB/RMB. I have some RMB cash leftover I didn't change for that reason and hope to spend on a vacation in China soon, where this "soon" is getting delayed for about 3 years in a row by now :-( Link to comment Share on other sites More sharing options...
Naam Posted February 20, 2011 Share Posted February 20, 2011 I am confused: your graph shows the CNY starting to seriously gain against the USD in mid 2005 (which is correct AFAIK), so why the emphasis on 13 years? Do you want to point out that the CNY/USD rate can stay put for extended periods of time? the 13 years were to demonstrate that during this period there was never an exchange rate of 8.7 as claimed. Link to comment Share on other sites More sharing options...
Naam Posted February 20, 2011 Share Posted February 20, 2011 What puzzles me about the CNY/THB exchange rate is the large difference between selling and buying RMB notes: about 3 THB/RMB vs. 5 THB/RMB. that is quite normal. you find the same discrepancies vs. any other currency anywhere in the world except Hong Kong too where you can get a fair rate. Link to comment Share on other sites More sharing options...
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