Renminbi down the road

China has been trying for over a decade to reform its currency regime to set up a more market-oriented exchange rate formation system.

The yuan had been pegged to the dollar during the planned economy days before 1979. From the late 1970s, when it opened its economy to the outside world, China has adopted a dual exchange rate system: a fixed official exchange rate and a parallel exchange rate for trade settlements.

Later, it introduced another rate system for domestic foreign exchange transactions between enterprises holding foreign currencies.

All these weakened the yuan further. In the end of 1993, the exchange rate of yuan was 5.8 against the dollar, down from 1.58 a dollar in 1979.

In 1994, the Chinese government unified the exchange rates and adopted a managed floating foreign exchange rate regime based on market conditions. The yuan was depreciated by a real 6.7 percent to reflect market supply and demand relations.

After that, the yuan reversed its downward trend and rose 4.8 percent from 1994 to 1997.

During the 1997-98 Asian financial crisis, China was under tremendous pressure to depreciate the yuan.

But to help its Asian neighbors overcome the crisis, China pledged not to do so and fixed it at 8.28 against the dollar. That helped anchor the struggling Asian economy.

On July 21, 2005, China announced that it was depegging the yuan from the dollar and shifting it to a market-based exchange rate regime with a basket of foreign currencies.

Source from China Daily

Replying to [Street Smart]:
Dear SS,
Today the exchange rate for CNY to USD came to 7.013 ;
there is expectation that dollars will further drop till 6.5...
What do you think?
Thanks//Leosun

Quoting from [Leosun]:


Replying to [Street Smart]:

Dear SS,

Today the exchange rate for CNY to USD came to 7.013 ;

there is expectation that dollars will further drop till 6.5...

What do you think?

Thanks//Leosun

When I started working in Korea in 2002, the US Dollar was 1 to 1400 KWon. The company has a number of young graduate from the Universities, they are train in linguistic skills and have to pick up the other traits such as Sales and Marketing. A young man, who speaks Japanese and Chinese besides his native language was particularly closed to me, he invited me to his home during the weekend and his father who works in a Nuclear Power Plant also invited me to a tour around the plant.


One day, during the Spring festival, the company goes to a camp for some training and lectures and skill development workshop. In the bus, I spoke to the young man, named Mr. Lee Guen Hyuen and did a calculated predication that the Korean Won will rise to above the 1000 per US Dollar exchange rate. If I have a million dollars, I would have bought the Korean Won and keep. Today, the exchange rate is 988.6 KRW to 1USD. This represents a change of 29.386% for a period of 6 years. If we have bought the Korean Won and put it in the Federal Bank, the money would have appreciated by US$293,860.00.


When the currency of yours gets stronger than the foreign currency, you have to sell that currency and buy the currency of your own. There are many US Blue chips companies such as the aerospace industries that their stocks have been going for a real bargain price, you can make a quick decision to capture the opportunity to buy the stocks. China needs a strong Knowledge based company to lean on with their hardware based industries. India is a strong software development based country with scores of software and system Engineers, who are hard working and willing to work for a smaller salary than their US counterpart. The trick is to marry the two key strengths and to manage or amalgamate them together and to market their ' products' .

With the amount of money, China should seek good investment opportunity both within and without the nation, to import high technology, talented people, and increase your Research and Development to find and produce better products and new Scientific discovery. At the same time invest into some projects or businesses overseas, simple things like buying real estates for example can reap good returns in years to come.


Street Smart

Quoting from [Mike W Liu]:


Replying to [Leosun]:I love my motherland. Hope her can be more beautiful.

It's "Hope SHE can be more beautiful".

You need to work harder on your English, buddy.