Yuan hits record high against $

[Thomas Promise]

The Fiat currency boys are playing rush and rollette with the worlds economy.

 

http://www.huffingtonpost.com/2011/12/26/yuan-high_n_1169935.html?icid=maing-grid7%7Cmain5%7Cdl1%7Csec3_lnk2%26pLid%3D123127

Edited December 26, 2011 by Thomas Promise (see edit history)

[tsap seui]

The Fiat currency boys are playing rush and rollette with the worlds economy.

 

http://www.huffingtonpost.com/2011/12/26/yuan-high_n_1169935.html?icid=maing-grid7%7Cmain5%7Cdl1%7Csec3_lnk2%26pLid%3D123127

 

I hate to see this happening but what's one chump gonna do against all the chimps? I liked it much better at 8 to 1. But like a good fart in the wind...them dayz is GONE, mister Mr.

 

tsap seui

[Zhou Zhou]

I liked that 8rmb=$1 gooder than gritz!

[griz326]

The western world is trying to suck China into the West's economic black hole.

 

IMO, the world should leave China alone; the Chinese are clearly more responsible than us...US...economically. In the long run, such a policy should be for the better.

[Doug]

Yep I advised my ex to sit on her money here in the USA. She wanted to send it home. She finally agreed.

[TLB]

The western world is trying to suck China into the West's economic black hole.

 

IMO, the world should leave China alone; the Chinese are clearly more responsible than us...US...economically. In the long run, such a policy should be for the better.

 

 

I don't think it's at all clear that they're more responsible -- have you seen all the apartment buildings with no one in them?

 

I guess we'll see in the next few years. Inflation, greater prices for their goods going out, demonstrations for more worker £ð£á£ù¡¡£­£­¡¡£é£æ¡¡£ô£è£å£ù¡¡£í£á£î£á£ç£å¡¡£ô£è£é£ó,¡¡£ô£è£å£ù¡¡£÷£é£ì£ì¡¡£ã£å£ò£ô£á£é£î£ì£ù¡¡£ç£á£é£î¡¡£á¡¡£ì£ï£ô¡¡£ï£æ¡¡£ò£å£ó£ð£å£ã£ô.

[Randy W]

The western world is trying to suck China into the West's economic black hole.

 

IMO, the world should leave China alone; the Chinese are clearly more responsible than us...US...economically. In the long run, such a policy should be for the better.

 

 

I don't think it's at all clear that they're more responsible -- have you seen all the apartment buildings with no one in them?

 

I guess we'll see in the next few years. Inflation, greater prices for their goods going out, demonstrations for more worker ｐａｙ　－－　ｉｆ　ｔｈｅｙ　ｍａｎａｇｅ　ｔｈｉｓ,　ｔｈｅｙ　ｗｉｌｌ　ｃｅｒｔａｉｎｌｙ　ｇａｉｎ　ａ　ｌｏｔ　ｏｆ　ｒｅｓｐｅｃｔ.

 

 

Yes - that's exactly true. They have MUCH more flexibility in how they are able to pull the strings from behind the scenes, but it's a VERY open question as to how successful that that ultimately will be.

 

As far as the empty buildings, they've experienced an increased urbanization from 20% in 1990 to 50% in 2011. That's a fairly sudden need for urban housing for 400 million - a population larger than that of the United States.

 

Their current 5-year plans call for a big slowdown in housing construction. However, some cities which have relied on income from property sales to developers have found themselves in a tight squeeze. Local debt is becoming a big issue in China.

Edited January 4, 2012 by Randy W (see edit history)

[Lee VD]

Yep I advised my ex to sit on her money here in the USA. She wanted to send it home. She finally agreed.

 

So she is NOT converting from USD to CNY?

 

Is anyone else playing the Yuan currency market with their offshore accounts?

 

It's pretty certain the Yuan will continue to inflate against the dollar, its just a question of how much how fast. Our strategy is to keep her money in Yuan as long as possible and when we travel to China to use US dollars and not the Yuan she has. In fact, using that strategy we should be sending more USD to China and depositing as Yuan at the bank.

 

Right now 1 Yuan will buy you .16 USD, but as it moves more towards the 5-1 ratio, that 1 Yuan will buy you .20 USD later, so as far as investments out there it is probably one of the best you can make right now. The Yuan is clearly undervalued and will continue to push up. Even if the Chinese Govt tries to hold it down, it will still move up virtually through trading power.

 

We have an ability to trade in that market easily due to our/spouses frequent visits to China and easy access to convert via any ATM and drop into spouse's Chinese bank account.

[knloregon]

" It's pretty certain the Yuan will continue to inflate against the dollar, its just a question of how much how fast...."

 

I hate to be the bearer of bad news, but a lot of well informed currency traders (as documented recently in the WSJ) --- disagree with you.

 

For instance, as many here know, the PRC only allows the RMB to trade in a very narrow window of its highly controlled international currency market option. (give or take about 5%) As WSJ recently pointed out------the RMB --over a number of recent trading periods-----traded AT THE LOW END OF PERMITTED SCALE---NOT THE HIGH END!!!---this should be like a fire alarm going off in a high rise condo, since that is a clear indication that the world currency traders consider the RMB--- (at least during those trading periods) ---OVER VALUED !!! (not undervalued)... So all the BULL SHIT which we are about to hear--- by American politicians---about how its ALL China's fault (undervalued currency) that caused ALL of America's problems---thats about to go out the window.

 

----think long and hard before you make major currency investments in the RMB vs. the USD --- in the near future.

[2mike&jin]

Yep I advised my ex to sit on her money here in the USA. She wanted to send it home. She finally agreed.

 

So she is NOT converting from USD to CNY?

 

Is anyone else playing the Yuan currency market with their offshore accounts?

 

It's pretty certain the Yuan will continue to inflate against the dollar, its just a question of how much how fast. Our strategy is to keep her money in Yuan as long as possible and when we travel to China to use US dollars and not the Yuan she has. In fact, using that strategy we should be sending more USD to China and depositing as Yuan at the bank.

 

Right now 1 Yuan will buy you .16 USD, but as it moves more towards the 5-1 ratio, that 1 Yuan will buy you .20 USD later, so as far as investments out there it is probably one of the best you can make right now. The Yuan is clearly undervalued and will continue to push up. Even if the Chinese Govt tries to hold it down, it will still move up virtually through trading power.

 

We have an ability to trade in that market easily due to our/spouses frequent visits to China and easy access to convert via any ATM and drop into spouse's Chinese bank account.

 

Well I wished I knew the answer to this question and other "for sure" responses. I must admit from my perspective it's a world gone mad....in terms of investments. For what it's worth I too - via my wife - have left some money in China. Several issues persist, many have been listed here. There is no assurance that the Yuan and USD will continue to move in the same directions - but I personally think that it will for awhile, with some up's and down's along the way. Who knows what the impact of our Government debt, fiscal policy and tax laws will have in the future. I do know that I'm continually troubled by reporting Chinese income, Chinese accounts, and repatriation of the funds. As I've mentioned in the past if it's under $10K in USD it makes little difference. The issues, at least in my mind, are reporting the accounts and the income every year to the IRS.

 

I suspect that one could work this $10K limit a bit by having multiple accounts - again, at some point it would become unmanageable. So, let's just say that someone has $250K USD converted into Yuan in China. (We all know that 1 person can only convert $50K USD a year - so I assume over time someone put the money there or your wife took 4 cousins to the bank with her). IRS rules say that any account (Investment, Bank, etc) that has more than $10K in it during any point in the year must be reported. Ostensibly if it were a CD/Bank account it's drawing interest and every penny must be reported as income. These troubling things make buying Yuan and holding it in CHinese Banks problematic if it is enough to make it worth the investment risk or reward. Yes my wife holds Yuan in a China bank, yes we report it every year, and yes we report the income every year. I'm not sure that the Government reporting requirements make it worth the 4% we get in appreciation and the 4% we get in interest. A corollary to this is the 1% fee for exchanging money going and coming.

 

Ok, notwithstanding all the negative issues, holding Yuan denominated assets "MIGHT" be a tick above the USD assets over the next few years - but like others have indicated it might not turn out like all have forecast, me included.

 

Here's a thought - To my friends that pushed me towards Chinese investments - the CIS 300 Index - down 27% for the last year - that China investment thingy didn't work out too well for them the last year!!!..... I didn't buy of course I'm much too conservative.

 

So, if you want to play the exchange rate game - I think it only makes sense to play FOREX...but that game is too quick and complicated for me. It all makes a day trader look like they are moving a glacial speed. Someone on CFL had a whole slew of advice on this and was working via a play account - your mileage may vary. Of course over the last several years the play has been on the Swiss Franc and Yen. Hindsight is 20/20.

 

So bottom line, even though I don't like the mechanics, the IRS rules, and the hassle we continue to leave "More" money in China than I'm comfortable with - and I am continually updating my understanding of the rules for repatriation of the funds.

HAPPY NEW YEAR!

[knloregon]

Mike has some interesting comments about the hassle of managing the Yuan/USD interface, and his experience is informative about the whole currency issue on a small scale--why currency, generally, trades on large scales and rapidly---in and out---by far more experienced guys than me.

 

My interest is as it might affect business opportunities in China, not as it might affect my own personal bottom line. For instance, if you have $10,000 personally invested in the mix---RMB/USD and it falls back 4% ---your loss is a whopping $400 USD. Likewise, assume that it appreciates against the dollar--- 4% this year --- (not what I think is gonna' happen) --WOO HO ~! ---you just pocketed $400 ! (now, report it to the IRS --- per Mike)

 

Mike's right, investors holding securities lost a lot last year, and I'm betting will lose more this year. Which is why I haven't added investment in my favorite fund---first invested in 2003--- in two years---and the only one that I have ever recommended at the Candle---Matthews China Investor ( MCHFX) --its a hybrid fund between HK and the mainland, has out performed all of its related indexes, and has delivered (even with a -20.85 in 2011) --- 14.86+ in the last 10 years---with the global melt down. (Morningstar).

[Lee VD]

As I understand it, you don't have to report the income unless you bring it back into the states (in whatever form). You can have your money offshore, make money offshore, and buy things offshore, just don't bring it home unless you want to pay taxes on it.

[Randy W]

As I understand it, you don't have to report the income unless you bring it back into the states (in whatever form). You can have your money offshore, make money offshore, and buy things offshore, just don't bring it home unless you want to pay taxes on it.

 

 

American citizens and LPR's report and pay taxes on their worldwide income.

 

Money earned in a foreign country may be excluded ONLY if it is reported. That is, if you FAIL to report it, you can lose the exclusion IF they discover the income. The exclusion only applies if you meet certain tests - see Form 2555.

 

There is also a requirement to report any foreign bank account which contained more than $10,000 during a year. The penalty can be 50% of the amount in an overseas account for doing what you describe.

Edited January 7, 2012 by Randy W (see edit history)