November 23, 2007
Looking for Sustained and Substantial Yuan Appreciation
China’s Yuan Rises Past 7.40 Per Dollar Before Trichet Visits
“Forwards contracts show traders are the most bullish on yuan gains since the end of the dollar link, betting the currency will reach 6.7790 in 12 months, a gain of 9.2 percent from the current spot rate. The U.S. dollar reached a record low versus the euro today.”
Good thing my long-term assets are mainly yuan-denominated while my long-term liabilities are mainly dollar-denominated.
Related: Renminbi Revaluation Redux, April 17, 2007
Cat: | Time: 10:08 pm (utc+8)
November 24th, 2007 at 12:12 am
Go ahead. Rub it in.
November 24th, 2007 at 12:28 am
Clearly Yuan has fastened its appreciation against US dollar in recent weeks given China’s larger trade surplus and increasing pressure from its major trading partners. It is quite likely to touch 7.3 by year end. But the story was different against other major currencies, especially on the EUR/CNY chart, which actually shows a depreciation of RMB in Nov. The trade surplus might narrow down in 2008 on the increasing costs of imports and the currency appreciation’s adverse effect on the exports. But foreign ’speculators’ like Comrade CM who diversify out of his USD assets into RMB denominated assets might push the Yuan to appreciate faster. :)
November 26th, 2007 at 3:00 pm
What vehicles have you guys been using (that are available to people in the US) to build RMB denominated assets ?
November 26th, 2007 at 5:17 pm
Crispy: There’s no practical way for most people to do it though I’ve heard Jimmy Rogers mention EverBank as one possibility.
November 26th, 2007 at 7:36 pm
Do you know if there is a way to trade the yuan?
November 26th, 2007 at 9:54 pm
Rod: Sure, there are RMB futures and options at the CME (don’t know how liquid they are).
November 27th, 2007 at 2:49 am
I just got back from GZ yesterday. I probably should have opened up a brokerage account over there. Since RMB is not currently a freely traded currency do you think foreigners to China have more issues bringing money in or moving money out ?
One other question… are you still a US citizen? If so, how do you deal with reporting income? do you get double taxed?
November 27th, 2007 at 10:01 am
Crispy: You couldn’t have opened an A-share account; no foreigner can (legally). It’s a lot easier to bring money in than it is to take it out. ;-) I am a US citizen and pay US taxes … I’m not sure what income you’re referring to? Interest income on Chinese bank deposits? You will pay Chinese taxes on that income and also have to report the income on your US taxes, but can claim a credit for the Chinese taxes paid.
November 29th, 2007 at 7:59 am
The reason I ask is because I have dual-citizenship. Taiwan and US… which means legally I can open an A-Share account (never got around to doing it.. maybe on my next trip). My tax question was aimed at capital gains income.. Although I am clueless on the tax system in China, can you maybe explain? are there ordinary and capital gains tax ?
November 29th, 2007 at 10:20 am
@Crispy: I know nothing about the tax system in China but I don’t believe there’s a capital gains tax. As a US citizen you are liable for global income so any investment gains made here must be reported to the IRS and will be taxed. (Don’t take my word for it though, ask a competent accountant or tax adviser.)