RMB Rumor

[jtfx]

A very close friend of mine told me of a rumor that China will try to devaluate the RMB in the coming year. They planned to release new RMB500 bills into circulation. Currently, the highest bill is RMB100 and as we know, dumping more money (money supply) into the system tends to devaluate the said currency.

Does anyone know how to capitalize on this? RMB is not traded in online forex, but can we use JPY as a substitute? ie, BUY USDJPY?

 

[Pharaoh]

The RMB is available at a few brokers. The Chinese government limits the range that it can move in a single day, but there's still enough wiggle room that some people trade it.

Currently, the RMB is significantly undervalued. The Chinese gov't likes it that way, since a weak currency promotes exports and so much of the Chinese economy is tied to exports. They'd have to go on a massive printing campaign to really damage the value.

Whether it's tied to some plan to alter the value of the RMB or not, China really could use a 500 or 1000 RMB note. A lot of transactions that would be handled by check or credit card in the USA are done in cash in China, and paying thousands of RMB for something can be a bit inconvenient. Then again, walking around a factory district with a shopping bag full of money is an entertaining experience.

 

[cowmadagan]

Yeah...ever seen a million dollars in cash? I have, but one USD is worth just under 32NTD today, so that's enough to buy a Cadillac and that's it. The biggest bill is a 2000, but every one pays for stuff in 1000s. It's nice getting like a hundred thousand in cash for your salary.