More on currency exchange rates

[TLB]

With all the talk about the currency exchange rate and its future (and I know this has been a topic before), I'm wondering if some of you more experienced folks have a strategy. Assuming that the yuan will either stay where it is or strengthen against the dollar, are you moving money to China for your future use (or even just to play the game)? If so, what are your plans/strategy/thoughts on this? And what instrument are you using?

 

I'm thinking about gradually moving money over (not everything though) bit by bit as a hedge against future rising of the RMB against the US dollar. I used to use Xoom.com but they don't serve China anymore. I'm thinking about Western Union, if you go in person to one of their places it's only $15-$20 to send several thousand $US. But I want to make sure when she gets it it's in RMB and not US dollars.

 

I also might need to start thinking about that talk with the fiancee that starts out with "you remember how much money I told you we'd have in China from my US pension after I retire?"

 

All thoughts appreciated.

 

Tim

[tsap seui]

With all the talk about the currency exchange rate and its future (and I know this has been a topic before), I'm wondering if some of you more experienced folks have a strategy. Assuming that the yuan will either stay where it is or strengthen against the dollar, are you moving money to China for your future use (or even just to play the game)? If so, what are your plans/strategy/thoughts on this? And what instrument are you using?

 

I'm thinking about gradually moving money over (not everything though) bit by bit as a hedge against future rising of the RMB against the US dollar. I used to use Xoom.com but they don't serve China anymore. I'm thinking about Western Union, if you go in person to one of their places it's only $15-$20 to send several thousand $US. But I want to make sure when she gets it it's in RMB and not US dollars.

 

I also might need to start thinking about that talk with the fiancee that starts out with "you remember how much money I told you we'd have in China from my US pension after I retire?"

 

All thoughts appreciated.

 

Tim

 

 

Tim, Starting in 2006, I've always simply used Western Union. Just sent $5,000 today. I think the rules are still $7,499 or something in one 24 hour period. Higher amounts cost you $26 dollars. Lower amounts cost $14. I don't really pay attention to what it costs, I just send the dang money, I'm buying convienence.

 

My wife always gets her money in rmb. The W/U folks always ask what currency you want the reciever to get the moola in. Last weeek, one of the W/U operators screwed up and put "dollars" on the request, lil' rabbit was simply given rmb.

 

What I like about it is, lil' rabbit goes to China Postal, walks up to the W/U window, the girl there walks the money two windows down and lil' rabbit gives her bank card to the teller there. Never has to touch the money.

 

I'm too stoopid to use the banking industry to send the money and this works so smoothly and very efficiently for us. I've bought my house over there through Western Union..... and kept the lil' rabbit in furrs, caviar, BMWs and Mercedes Benz's cause her friends all drive Porches and I must make amends. jes kiddin'.

 

Good luck, it's WAY easy.

 

tsap seui

 

I've already gotten all the money needed for the next interview, now, if I could just bribe a USCIS agent in Texas to get our damned case a P-2. I really like the Chinese way of doing things. Here we have slow, there they have slow, and they have $wift.

[credzba]

With all the talk about the currency exchange rate and its future (and I know this has been a topic before), I'm wondering if some of you more experienced folks have a strategy. Assuming that the yuan will either stay where it is or strengthen against the dollar, are you moving money to China for your future use (or even just to play the game)? If so, what are your plans/strategy/thoughts on this? And what instrument are you using?

 

I'm thinking about gradually moving money over (not everything though) bit by bit as a hedge against future rising of the RMB against the US dollar. I used to use Xoom.com but they don't serve China anymore. I'm thinking about Western Union, if you go in person to one of their places it's only $15-$20 to send several thousand $US. But I want to make sure when she gets it it's in RMB and not US dollars.

 

I also might need to start thinking about that talk with the fiancee that starts out with "you remember how much money I told you we'd have in China from my US pension after I retire?"

 

All thoughts appreciated.

 

Tim

 

 

Tim,

 

My wife and I started as soon as we were married investing in China housing.

Our thought was stocks can go up or down, and so can the value of your house, but with a house if its worthless you can live there, with stock if its worthless, well its worthless.

As it turns out the housing has appreciated quite nicely, and we have renters in the apartments so we get some small income from that.

 

The big difference for us is we plan to live in China in the not too distant future, so buying housing is a good thing for us, but not for everyone.

Also, we have the normal renter problems, but from 8,000 miles away they are a bit more challenging. We have to fly over about once a year to take care of issues with the apartments, but then that is tax deductible travel, so its not too bad. (Yes we claim the rental income).

 

There are also some Chinese mutual funds, I use one called Mathews China fund.

Over time it has done pretty well though it was hammered like everything these past years.

Still, last year it was up about 20%, so it is recovering pretty well.

 

You can transfer cash as Tsap said using western union, but when we bought the houses we did not want to send small amounts of money, so I used bank wire transfer.

It was 40 or 50$ for an unlimited amount.. or at least unlimited for my budget.

The problem with wire transfer to foreign country is it is sent to whatever you write, no returns.. and that ALWAYS makes me nervous.

So, it usually costs me twice, once I send only 100$, then when I know everything is right I send the rest of the money. I know I am paranoid, but it cost me 80$ and I dont worry for a week about it going to the wrong place. Well worth it in my book.

 

Once you have cash there, you can put it in a stock account, and invest it from America via phone.

My wife has a little bit there she still plays with, but in my book China stock is just too dangerous to play with, other than just for fun.

 

 

Good luck.

[tsap seui]

With all the talk about the currency exchange rate and its future (and I know this has been a topic before), I'm wondering if some of you more experienced folks have a strategy. Assuming that the yuan will either stay where it is or strengthen against the dollar, are you moving money to China for your future use (or even just to play the game)? If so, what are your plans/strategy/thoughts on this? And what instrument are you using?

 

I'm thinking about gradually moving money over (not everything though) bit by bit as a hedge against future rising of the RMB against the US dollar. I used to use Xoom.com but they don't serve China anymore. I'm thinking about Western Union, if you go in person to one of their places it's only $15-$20 to send several thousand $US. But I want to make sure when she gets it it's in RMB and not US dollars.

 

I also might need to start thinking about that talk with the fiancee that starts out with "you remember how much money I told you we'd have in China from my US pension after I retire?"

 

All thoughts appreciated.

 

Tim

 

 

Tim,

 

My wife and I started as soon as we were married investing in China housing.

Our thought was stocks can go up or down, and so can the value of your house, but with a house if its worthless you can live there, with stock if its worthless, well its worthless.

As it turns out the housing has appreciated quite nicely, and we have renters in the apartments so we get some small income from that.

 

The big difference for us is we plan to live in China in the not too distant future, so buying housing is a good thing for us, but not for everyone.

Also, we have the normal renter problems, but from 8,000 miles away they are a bit more challenging. We have to fly over about once a year to take care of issues with the apartments, but then that is tax deductible travel, so its not too bad. (Yes we claim the rental income).

 

There are also some Chinese mutual funds, I use one called Mathews China fund.

Over time it has done pretty well though it was hammered like everything these past years.

Still, last year it was up about 20%, so it is recovering pretty well.

 

You can transfer cash as Tsap said using western union, but when we bought the houses we did not want to send small amounts of money, so I used bank wire transfer.

It was 40 or 50$ for an unlimited amount.. or at least unlimited for my budget.

The problem with wire transfer to foreign country is it is sent to whatever you write, no returns.. and that ALWAYS makes me nervous.

So, it usually costs me twice, once I send only 100$, then when I know everything is right I send the rest of the money. I know I am paranoid, but it cost me 80$ and I dont worry for a week about it going to the wrong place. Well worth it in my book.

 

Once you have cash there, you can put it in a stock account, and invest it from America via phone.

My wife has a little bit there she still plays with, but in my book China stock is just too dangerous to play with, other than just for fun.

 

 

Good luck.

 

 

 

Sounds like you have done great Credzba. Good luck with your future move.

 

I understand your fears with wires, etc, and small amounts of money sent at one time. With W/U she has to fill out a card at the W/U teller's window and buddy, every letter has to be exactly what the slip has on it for the names of sender and receiver, as well, the dollar amount she enters has to match the slip sent from W/U. As well, she shows her photo ID card. One letter or number out of place and the transaction is dead.

 

We bought the home in 2008 when the exchange was up so it didn't take many $7,400 transactions to put enough money in her bank to buy, finish, and furnish our home.

 

I guess W/U is pretty unsophistimacated in the overall scheme of banking....but then again, so is I. Ah'm jes a simple dumber inna rock hillbilly, I must say. And I need EASY.

[2mike&jin]

Ok, a subject that is near and dear to my heart.

 

1st if I wanted money to go to China - and didn't want to pay any fees - I would use the BofA ATM card through ChinaConstruction Bank (albeit the darn ATM card wouldn't work for me last time), my backup in the event I wanted more than 3000RMB a day....I use a bank that reimburses me for ATM fees, including when drawn in RMB in CHina. If I had a wife, fiance or etc, this is the way I would feed them RMB....as it doesn't count against the USD $50K that each person can convert each year.

 

Ok, if I wanted to send "bigger amounts" I would do the following. We just had the cousin (who had access to my wife's ID card - we left it in the house when we were there in Sep) OPEN a NEW Bank Of China Great Wall ATM account and a CD account. The bank linked them together. The cousin EMS us the bank book, all the instruction and the BOC token number generator seeded with their base - so that we can imput the 6 digit toke mi mi - always changing secret code, along with USerid and Password. We signed on yesterday - instructions are in Chinese and English - and in fact we can now - International Wire transfer USD to her new BOC ATM account, and then ONLINE - change it to RMB, and move it to the CD account - I think the 6 month cd was 2.35%, but the 2 year is up around 4%. I "cruised around" the website, changed the password etc, and noticed that in the USD/RMB change page - there is a counter at the bottom that indicates "HOW MUCH OF THE $50K USD yearly allowance" one has changed. I didn't check - but the "limit" appears to change based on the type of money you want to convert to RMB, i.e. Euro's Yen, etc. Ok, according to the bank VP, who we talked to while the cousin was there and helped set it all up for us, the wire will take 2-3 days, the funds are instant and we can overnight have it in the CD account. [Don't forget any foreign bank account for a USC or an LPR that is in the US has to report that account each year, as well as file any earnings with the IRS and pay US taxes] Of course if your wife is not a USC, living in the US, or has not elected to be treated as a USC for tax purposes - then you don't have to do anything!

 

Our thinking, which could be seriously flawed, is that the interest on the CD's she's had for years have been earning about 4% each and every year - and the PRC Government stopped "witholding or charging" tax on bank interest some years ago. When she first bought some of the CD's the USD was 805RMB to the dollar (before I met her), some at 7.65, and you all know...the continuing story. So from our perspective, if the PRC Gov't only allows the RMB to float down 3% per year and we're getting 4% interest - that 7% is a lot better than having money in fixed instruments in the US, where the USD vlaue is and probably will deterioate over time. (Of course we all should've bought commodities -- I see Gold for the year was actually about 10th in growth with "COTTON" being the number one growth commodity for the year" - be carefullllll T-shirts will start costing a lot more soon]

 

We haven't "sold the farm" and moved large amounts of USD to China to have all our friends and family convert to RMB for us...but we continue to "increase" our position in RMB denominated assets to try and avoid the pain of eventual High Inflation here in the US and more specifically with USD. We currently do not believe that the Euro or the Yen are in such a long term good position to balance the USD. Of course, always my secondary position, is to provide a little insurance to my wife an family in the event that the USD economy does blow up, and we have liquidity problems within our system. But the bottom line is, there is an even chance that the RMB won't go up anymore, the USD will rebound against other currencies, the US will eliminate the debt and interest burden, and we will have lot's of surplus money in our Government due to tightened spending and increased revenue to our Government - NOT!

[knloregon]

First off---great suggestions about how to move---and convert between the two currencies here. LOT I didn't know. And if you have to move money for personal and family reasons, good ways to do it. But I can't for the life of me understand why anyone would do this as an investment. Currency traders have been burned on a regular basis betting on RMB appreciation. We have posts here from several years ago from one 'Expert' of the major Wall Street players indicating he believed significant appreciation of the yuan against the dollar was: "imminent" --- It never happened. Since currency traders move in and out of markets capriciously, can you imagine how much money was lost on his prediction?

 

But now, other problems arise. The yuan is in a very inflationary cycle, much more so than the US dollar (to date) so its losing value. It buys less on the streets of China every day. So why convert from more stable dollars? Seems like a poor investment. Personally, I continue to invest in east Asia economic growth. (China over 10% in GDP last year, way ahead of any place in the west)) on balance, rmb hasn't matched that, and if inflation isn't controlled, will slide backwards. There could be a politically motivated substantial strengthening of the rmb. but I consider that a long shot.

[2mike&jin]

First off---great suggestions about how to move---and convert between the two currencies here. LOT I didn't know. And if you have to move money for personal and family reasons, good ways to do it. But I can't for the life of me understand why anyone would do this as an investment. Currency traders have been burned on a regular basis betting on RMB appreciation. We have posts here from several years ago from one 'Expert' of the major Wall Street players indicating he believed significant appreciation of the yuan against the dollar was: "imminent" --- It never happened. Since currency traders move in and out of markets capriciously, can you imagine how much money was lost on his prediction?

 

But now, other problems arise. The yuan is in a very inflationary cycle, much more so than the US dollar (to date) so its losing value. It buys less on the streets of China every day. So why convert from more stable dollars? Seems like a poor investment. Personally, I continue to invest in east Asia economic growth. (China over 10% in GDP last year, way ahead of any place in the west)) on balance, rmb hasn't matched that, and if inflation isn't controlled, will slide backwards. There could be a politically motivated substantial strengthening of the rmb. but I consider that a long shot.

 

 

Yea...I think "East Aisa Economic Growth" is much better that Yuan investment/conversion - no doubt, that's why one needs to have "typical assets" that ride the inflation swell, (metals, commodities, real estate, things...) and let the paper money be a small portion or in some cases "no portion" of your overall strategy. When money is moved to China - the underlying assumption is that "most" of it would be put to work in "things", albeit they have their problems as well. So I think chasing the Yuan is a poor lead strategy as well, but mostly the point was how to do it.....but I can assure all....if I'm buying Yuan - it has to be the wrong thing to do!

[knloregon]

"...but I can assure all....if I'm buying Yuan - it has to be the wrong thing to do! .."

 

Mike, if everything were a sure bet we'd all be rich! Now, if I can just market time................

[Tony_onrock]

There is actually a way to arbitrage on the exchange rate. It works like this:

Set up a Cooks Island or other tax haven company, open up an account in HK and one account with the same bank in China proper.

Use USD to convert into RMB in HK, this is offshore RMB and cannot be brought into China normally. But you can work with the bank to send this money into China and deposit it in the onshore bank account. Mind you, this is still offshore RMB and can not be withdrawn or invest in China, just like USD. The onshore bank branch issues a LC in favor of the company, with the RMB cash as deposit. Your company draws down on the LC as a loan in USD or HKD, convert it into offshore RMB and deposit it again with the same bank to secure another LC, so on so forth. The differential between HK lending rate and PRC lending rate should make up for the costs of the LC. 3 months deposit with most banks now is 4.6% (minimum deposit 3 mm RMB). After a while you unwind the structure, repay some of the offshore loan to release the onshore pledged RMB, convert that RMB back into USD. Round it a couple of times. What you get is RMB appreciation on your USD at a multiple, depending how many times you round this and the interest rate arbitrage, if any. The downside risk: RMB depreciation and 2012, plus PRC government plugging this hole. At least 20 mm USD a day is done in this product. For the bank, it generates a huge RMB deposit onshore. Although this deposit can not be lent out, it does help the deposit/lending ratio for the bank. It also earns a small fee and has a very safe lending for its offshore cash.

Please note that this a not a financial advise, just a product introduced to me by a bank. Please also be kind enough not to spread this information to avoid the PRC bank regulators finding out about this.

[natopronto]

Some investment circles are saying the US won't be happy until the RMB is 5-1 rate vs the $ Dollar.

[knloregon]

Thanks Tony ----- !!! Nice to hear from you ! Seems workable, but since PRC is always concerned about hot money, and definitely doesn't INTEND to lose banking control----it is, after all one of the things it does best in its 'managed economy' ----- aren't you afraid that it could not only pull the rug on the letters of credit, but punish those in the process (after the funds are transfered) to make an example of them? -----Now, there's one way to plug a hole!!

 

----and btw, I don't put this kind of aggressive action above not only PRC but also the USA going forward to punish hedge funds-----commodities come to mind: Flooding the market with a specific holding ---- (cotton reserves, as an example----which China has) to not only punish the hoarders--- but to put the real bite to the 'get rich quick' crowd.

 

Fool me once..........

[knloregon]

"...The US is simply using China as a whipping boy for its own failed economic policies...."

 

A----men Don...

[tsap seui]

"...The US is simply using China as a whipping boy for its own failed economic policies...."

 

A----men Don...

 

 

 

DOUBLE A-----MEN

 

China would be fools to kowtow to our leader's greed and wasteful ways. Why should they go under because of our stupidity and greed? We should take responsibility and fix our own house instead of pointing Uncle Sam's ugly crooked finger at others.

 

tsap seui

[Tony_onrock]

Thanks Tony ----- !!! Nice to hear from you ! Seems workable, but since PRC is always concerned about hot money, and definitely doesn't INTEND to lose banking control----it is, after all one of the things it does best in its 'managed economy' ----- aren't you afraid that it could not only pull the rug on the letters of credit, but punish those in the process (after the funds are transfered) to make an example of them? -----Now, there's one way to plug a hole!!

 

----and btw, I don't put this kind of aggressive action above not only PRC but also the USA going forward to punish hedge funds-----commodities come to mind: Flooding the market with a specific holding ---- (cotton reserves, as an example----which China has) to not only punish the hoarders--- but to put the real bite to the 'get rich quick' crowd.

 

Fool me once..........

 

 

Agree that the window is closing fast. The PRC government's biggest tool against such planning is actually putting pressure on the banks to stop . But then again, every time they come up with something, we design some thing else. Right? It is never ending cat and mouse game. Every stucture used is perfectly legal, so no fear of punishment.

[Tony_onrock]

For small amounts, use the 50K USD method, having 5 family and friends convert 50k each. Then use another offshore account to do another 5X50 with 5 different PRC person. Try not to send to each person exactly same amount and definitely do not use the same account to send to more than 5 people in any given year. My bank manager told me that they have not linked the data at PRC banks.

For investments, Bond yield is about 7-8%, CD at 4.1 for one month, 4.6% for 3 and up to 5% for one year. This is about the same rate as inflation here. Use a private banking officer at the bank, the combine a couple of people's money and give the above rate. One month deposit was as high as 5% last year with ANZ, but rate has lowered since to the above quoted rates.