Chinese RMB to Appreciate? By When?

[Blind/Lame]

wazzziz,

Indeed it has...but it WILL break.  If you are a USD investor buying the Yuan is a no-brainer

OMG, this is sheer torture....

[Vulcanl]

"....OMG, this is sheer torture....."

Why?  Please explain

[no point]

"....OMG, this is sheer torture....."

Why?  Please explain

Probably involves technobabble otherwise known as stuff Vulcan doesn't understand.

[Vulcanl]

PP,

I WAS going to post something along the lines of "...another coward unwilling to backup their statements, so Vulcan WINS..."

But I am willing to turn over a new leaf and be 'nicer' (as that appears to be my lone sin around here) and will give you another opportunity.

I posit that it is a FOREGONE CONCLUSION that the Yuan will significantly appreciate against the dollar.  This is a NO-BRAINER given what even the mainstream media now acknowledge is the true state of the Western developed economies, in particular the United States relative to Asia, in particular China.

Please engage me in the (insult free) debate and substantiate your position otherwise.

[think you just did]

PP,

I WAS going to post something along the lines of "...another coward unwilling to backup their statements, so Vulcan WINS..."

[sure vulcan]

Ok I will engage.

Condition is you never again palm stuff away as technobabble (your phrase not mine) and stop claiming journalsim is factual.

Deal or not?

West vs East, whatever, different debate.

Yuan is undervalued, no issue here. It is however a protected currency so what do you do. While fx is undervalued stocks are debatable bubbly so buying them whatever way as proxy isn't ideal and your average guy can't do a ndf. Suggestions welcome.

[Vulcanl]

"...Condition is you never again palm stuff away as technobabble (your phrase not mine)..."

OK we have a deal

"... and stop claiming journalsim is factual..."

But...it IS (at least what I use as support for my statements)!

"...It is however a protected currency so what do you do...."

Be patient.  The current situation (China keeps printing more Yuan to mop up USD/buy USTs to maintain the Yuan peg) is unsustainable.  China is already diversifying (into EUR, JPY/JGBs, direct currency swap agreements with lesser trading partners, Gold, etc)

"...While fx is undervalued stocks are debatable bubbly so buying them whatever way as proxy isn't ideal and your average guy can't do a ndf. Suggestions welcome..."

If you're already in...stay in and ride the ups and downs.  When all the dust settles the FUNDAMENTALS are still the same: Asia and its massive reserves will cushion any further bubbles popping.

Look at this at a very high level: This is very much a zero-sum situation with winners (Asia) and losers (the West), and we are getting ever closer to the end game

[sure vulcan]

Journalists often use facts of course, a lot of stuff though is largely opinion.

As for chinese stocks, whether Asia breaks out or not (or when) doesn't automatically mean they are not overvalued. Earnings ratios are cazy and the govt has introduced several measure to calm it down.

If I had an easy method to get long rmb I would, buying red chips isn't one of them though imho.

[Vulcanl]

sure vulcan,

The times are a changin'!  Who would've thunk the below even 6-8 months ago?

FT.com

Banks back switch to renminbi for trade
By Robert Cookson in Hong Kong

Published: August 26 2010 17:55 | Last updated: August 26 2010 17:55

A number of the world’s biggest banks have launched international roadshows promoting the use of the renminbi to corporate customers instead of the dollar for trade deals with China.

HSBC, which recently moved its chief executive from London to Hong Kong, and Standard Chartered, are offering discounted transaction fees and other financial incentives to companies that choose to settle trade in the Chines

“We’re now capable of doing renminbi settlement in many parts of the world,” said Chris Lewis, HSBC’s head of trade for greater China. “All the other major international banks are frantically trying to do the same thing.”

HSBC and StanChart are among a slew of global banks – including Citigroup and JPMorgan – holding roadshows across Asia, Europe and the US to promote the renminbi to companies.

The move aligns the banks favourably with Beijing’s policy priorities and positions them to profit from what is expected to be a rapidly growing line of business in the future.

The phenomenon will accelerate Beijing’s drive to transform the renminbi from a domestic currency into a global medium of exchange like the dollar and euro.

Chinese central bank officials accompanied StanChart bankers on a roadshow to Korea and Japan in June. The bank held similar events in London, Frankfurt and Paris.

Lisa Robins, JPMorgan’s head of treasury and securities services for China, said there had been a “spike in interest” from international clients.

An increasing number of Chinese companies have been asking foreign trading partners to accept renminbi as payment, said Carmen Ling, Hong Kong head of global transaction services at Citi.

BBVA, Spain’s second-biggest bank, is also drawing up plans for a global marketing campaign that will focus on Latin American companies that export to China.

Banks started establishing renminbi trade settlement operations in mid-2009, when Beijing introduced a pilot scheme allowing companies to use the renminbi for trade outside China.

The scramble has intensified in recent months as Beijing has substantially expanded the scheme – from a handful of Asian countries to the whole world – and introduced other liberalisations to its currency regime.

Cross-border trade in renminbi totalled Rmb70.6bn ($10bn) in the first half of the year – about 20 times the Rmb3.6bn recorded in the second half of 2009.

But those figures remain tiny compared to the $2,800bn worth of goods and services that were traded across China’s borders last year, most of which was settled in dollars or euros.

With renminbi trade settlement volumes expected to increase rapidly, banks are under pressure to establish a foothold in the nascent market and demonstrate to Chinese officials that they are committed to the scheme.

China has taken several steps in recent months to boost the international use of its currency and to establish Hong Kong, the special administrative region, as the global centre for offshore renminbi business.

McDonald’s, the US burger chain and icon of globalisation, took advantage of the new rules this month when it became the first foreign multinational to issue renminbi-denominated bonds in Hong Kong.

[Vulcanl]

There are some posters here today who for some inexplicable reason (because they were proved WRONG) want re-hash the whole Asian Decoupling debate. 

One of the counter-arguments was that as long as there were no other options to the USD as the World's reserve currency, it would be impossible for China in particular to take a more leading role in World Economic/Financial affairs.

Notch another WIN for Vulcan:

Yuan may be at 'tipping point' in Hong Kong
By Chris Oliver, MarketWatch
HONG KONG (MarketWatch) -- Chinese currency deposits in Hong Kong banks are expected to accelerate in coming months, marking what could be a tipping point for the use of the yuan as a currency for settlement and trade, analysts say.

Deposits of the currency held in Hong Kong banks rose to 103.7 billion Hong Kong dollars ($1.23 billion) in July, an increase of 15.6% from the prior month, and 86% higher from a year earlier, according to data released by the Hong Kong Monetary Authority earlier this week.

"We expect even faster yuan deposit growth going forward," said Nomura analysts in a note Thursday.

The July figures were bolstered in part by China's move to relax limits on the use of the yuan in Hong Kong, part of a program that got underway in the last 11 working days of the month.

In addition to the rising deposits, yuan trading in Hong Kong has risen to about $50 million in daily turnover, up from nearly nothing in seven weeks.

Traders will look more favorably towards the yuan as the pool of funds available deepens, drawn in part by narrowing spread between the yuan's value against the U.S. dollar in Hong Kong and the value it fetches against the dollar on the mainland, according a Wall Street Journal report that cited Deutsche Bank research.

Attractive settlement

Another factor boosting use of the yuan is a growing need for companies doing business in mainland China to settle accounts in the same currency. For example, foreign companies that offer yuan-invoicing might be seen as more attractive to companies on the mainland.


Dollar bulls shouldn't despair
The euro should resume its slide against the dollar, as euro-zone growth falters in the wake of the U.S. slowdown and risk sentiment deteriorates again.

Nomura research shows the yuan's usage as a currency of settlement in Hong Kong is doubling every quarter, while deposits should continue at double-digit rates of growth.

Another catalyst is the growing pool of yuan in circulation outside China, much of it the byproduct of huge trade surpluses and a financial account laden with foreign direct investment flows.

It's likely this money could find a home in Hong Kong as a spring board to China's capital markets, or to underwrite yuan-denominated bonds.

"It would not be too far fetched in our view to think that the yuan offshore market will one day trade as much as the eurobond market," Nomura said.

China doesn't allow its currency to be freely exchanged on currency markets, instead maintaining a system designed to restrict the flow of currency across its borders.

[no time soon]

China won't let rmb appreciate (much) anytime soon, it can't afford to.  It is still too reliant on exports and people pay them in usd. Production margins are too tight to allow reval and still make a profit. They earn usd and pay rmb. Ok a simplification but they just can't afford it to happen.

[Vulcanl]

"...China won't let rmb appreciate (much) anytime soon, it can't afford to..."

It also can't afford to continue the peg either!

China screwed either way and they know it. 

If they continue the peg inflation starts to get out of control.

If they don't continue the peg their massive holdings of USTs lose significant value pretty much overnight.

F****d either way!!  They will choose the latter as it is the lesser of two evils

[vistula]

yeah but they will decouple.. right, vulcani?

[Vulcanl]

They already have, Vistula...they already have 

[Vulcanl]

First HK (as a trading centre for Yuan), now Singapore...Kubes, are you SURE that it will take DECADES for the CNY to become a freely traded World currency?!?!?:

Singapore in talks to be Chinese yuan trading hub

AFP

Topics:Economy Government and PolicyInternationalCommodities
On Monday 11 April 2011, 12:59 SGT

The central banks of Singapore and China are in talks to set the city-state up as a trading hub for the Chinese yuan, a report said Monday.

The move would allow Chinese banks to do more business outside the mainland and also bolster Beijing's aim to promote its currency as an international unit.

Hong Kong is the only city outside mainland China where offshore trading of the yuan, or renminbi, is allowed.

The Wall Street Journal, citing sources familiar with the matter, said the People's Bank of China had been receptive to interest from Singapore to be a market for the buying and selling of the Chinese currency.

It said, however, that a decision on the outcome of the talks was not imminent.

The Monetary Authority of Singapore (MAS) did not comment directly on the report when contacted by AFP, but said the city-state "is well positioned to facilitate trade-linked business flows with mainland China".

The People's Bank of China did not respond immediately to questions faxed by AFP.

A greenlight from China will boost Singapore's status as one of the top financial hubs in Asia alongside Hong Kong and Tokyo. The city-state is the second largest forex trading centre in Asia after Japan.

Top leaders in Beijing want to see the yuan adopted as a global reserve currency to reflect China's growing economic and political clout.

Allowing the yuan to be used more widely overseas also helps China reduce the amount of dollars flowing into the country, which is adding to its already world-beating foreign exchange stockpile and fanning inflation.

Last year, the MAS signed a three-year currency swap agreement with China that allows the city-state to tap up to 150 billion yuan ($23 billion) in liquidity from its Chinese counterpart.

In addition, banks such as HSBC, Singapore's DBS Bank and the Industrial and Commercial Bank of China currently offer yuan banking services in Singapore.