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I find it hard to personally use the CNY/RMB for anything. Money is a special thing and all history is taken into account with risk. I can't realistically imagi

I find it hard to personally use the CNY/RMB for anything. Money is a special thing and all history is taken into account with risk. I can't realistically imagine my money safe at any point over a hypothetical 50 year timespan, especially considering the interventions in the HKD over the past year or with the RMB/CNY in general. Imagine asking yourself the same thing about the US Dollar, Yen, even the Australian dollar, Pound over their entire timespan as a floated exchange rate. They've never been any illusions about it, it's WYSIWYG. You can't freely move CNY out of China to start with. Imagine having your savings, or backing your business on such a currency. I guess eventually it's possible, say after more than 3-5 decades of proof that its a stable currency

yskchu 10y ago
Not sure what you mean about interventions in the HKD. The HKD is pegged against the USD and it's been that way since the poms were still in power and HK was a colony. Specifically, since 1983, it has been pegged to the current rate.
- seanmcdirmid 10y ago
  HKD is basically the US dollar at this point, and it is fully convertible. Less risk than the RMB, which you should only hold to do biz in China or if you are resident there.
- akhatri_aus 10y ago
  There were interventions in HIBOR last year that leaked into the HKD overnight rates. In effect lots of businesses ended up paying to help China stop currency outflows.
seanmcdirmid 10y ago
I was in this situation last year. After 8 years of working in China, I had much of my savings in RMB in a bank. I was pretty lazy about moving it out into investments, and since the RMB was appreciating, I didn't feel any pressure to jump through the hoops to do forex. However, after the initial deprecation last year, I saw the writing on the wall, and got the money out. It wasn't easy, but it wasn't impossible either. Chinese citizens can exchange $50K USD a year, which doesn't seem to be going away, while foreigners can exchange what they earn in China...with proper tax documentation (it took a few weeks to complete my initial forex). Investment opportunities in China really suck! You have the bubbly real estate market, the insider trader stock market, and foreigners are actually very restricted from doing either of both anyways (we can't buy stocks, acquiring property is tricky, not that I would want to do either). The only reason I kept my money in China was because of the appreciation, investments also weren't doing well at the time. I can see the RMB being a serious currency..it isn't that messed up compared to say the Venezuelan Bolivar, or many currencies in SE Asia or even the Indian Rupee. Heck, the Japanese Yen is even more volatile, and I would have lost big time if I made bets on the pound or the Australian dollar. But the lack of convertibility, even if only partial, is a big show stopper. They really should make more effort to that, and they seem to have stalled for the last 10 years while walking backwards from the reforms of the early/mid 00's.
- tormeh 10y ago
  Money isn't for investment - it's for trade. A currency's long-term value isn't really important.
  - seanmcdirmid 10y ago
    Truth, which is why holding the RMB to me was virtually pointless. I should have converted to USD and invested, but at the time investments were doing poorly while the RMB appreciated, so my procrastination saved me money. Can't count on that in the long term.
  - AnimalMuppet 10y ago
    Money is used for three things - transactions, store of value, and unit of account. For store of value, the long term (or at least medium term) value is quite important.
  - CyberDildonics 10y ago
    It was for the first few thousand years of documented history.
    - tormeh 10y ago
      I think that's more gold and silver.
- akhatri_aus 10y ago
  Volatility isn't as important as low inflation and the ability of price discovery. I've heard the argument that the Yuan lacks volatility and hence it's stable - on the contrary, it risks sudden massive shocks and they spill out to other countries in other manifestations to compensate for the fixed exchange (or somewhat pegged) rate. Price discovery is extremely important, even if it comes with volatility. It would be comforting to know that China could reinvest its trade surplus back into the US, which it's not doing well since it's not incentivised to do so, solely investing in Treasury's. This is why we're in a recession, because this cash is a drag on consumption, and its stuck in Treasuries.
mempko 10y ago
Fiat money should never be used as a savings vehicle. This is why the rich invest in property and ownership in real things. And no i'm not advocating gold.

yskchu 10y ago

Not sure what you mean about interventions in the HKD. The HKD is pegged against the USD and it's been that way since the poms were still in power and HK was a colony. Specifically, since 1983, it has been pegged to the current rate.

seanmcdirmid 10y ago
HKD is basically the US dollar at this point, and it is fully convertible. Less risk than the RMB, which you should only hold to do biz in China or if you are resident there.
akhatri_aus 10y ago
There were interventions in HIBOR last year that leaked into the HKD overnight rates. In effect lots of businesses ended up paying to help China stop currency outflows.

seanmcdirmid 10y ago

I was in this situation last year. After 8 years of working in China, I had much of my savings in RMB in a bank. I was pretty lazy about moving it out into investments, and since the RMB was appreciating, I didn't feel any pressure to jump through the hoops to do forex. However, after the initial deprecation last year, I saw the writing on the wall, and got the money out. It wasn't easy, but it wasn't impossible either. Chinese citizens can exchange $50K USD a year, which doesn't seem to be going away, while foreigners can exchange what they earn in China...with proper tax documentation (it took a few weeks to complete my initial forex). Investment opportunities in China really suck! You have the bubbly real estate market, the insider trader stock market, and foreigners are actually very restricted from doing either of both anyways (we can't buy stocks, acquiring property is tricky, not that I would want to do either). The only reason I kept my money in China was because of the appreciation, investments also weren't doing well at the time. I can see the RMB being a serious currency..it isn't that messed up compared to say the Venezuelan Bolivar, or many currencies in SE Asia or even the Indian Rupee. Heck, the Japanese Yen is even more volatile, and I would have lost big time if I made bets on the pound or the Australian dollar. But the lack of convertibility, even if only partial, is a big show stopper. They really should make more effort to that, and they seem to have stalled for the last 10 years while walking backwards from the reforms of the early/mid 00's.

tormeh 10y ago
Money isn't for investment - it's for trade. A currency's long-term value isn't really important.
- seanmcdirmid 10y ago
  Truth, which is why holding the RMB to me was virtually pointless. I should have converted to USD and invested, but at the time investments were doing poorly while the RMB appreciated, so my procrastination saved me money. Can't count on that in the long term.
- AnimalMuppet 10y ago
  Money is used for three things - transactions, store of value, and unit of account. For store of value, the long term (or at least medium term) value is quite important.
- CyberDildonics 10y ago
  It was for the first few thousand years of documented history.
  - tormeh 10y ago
    I think that's more gold and silver.
akhatri_aus 10y ago
Volatility isn't as important as low inflation and the ability of price discovery. I've heard the argument that the Yuan lacks volatility and hence it's stable - on the contrary, it risks sudden massive shocks and they spill out to other countries in other manifestations to compensate for the fixed exchange (or somewhat pegged) rate. Price discovery is extremely important, even if it comes with volatility. It would be comforting to know that China could reinvest its trade surplus back into the US, which it's not doing well since it's not incentivised to do so, solely investing in Treasury's. This is why we're in a recession, because this cash is a drag on consumption, and its stuck in Treasuries.

mempko 10y ago

Fiat money should never be used as a savings vehicle. This is why the rich invest in property and ownership in real things. And no i'm not advocating gold.