2015-01-28

Do You Plan to Hoard Dollars?

As I've covered previously, when the Chinese yuan slides, the financial media in China starts talking of hoarding dollars. Mostly unseen since 2012, it's back.

21st CBH: 人民币贬值持续 囤点美元划算不? (Yuan Devaluation Continues, Do You Plan to Hoard Dollars?)
The question is, after you've exchanged for dollars, what do you do with them, just hoard them? Renminbi financial products yield 4.4% or you can put cash into the stock market or P2P lending, but U.S. dollar financial products only yield 1.2% to 2.5%. A lot of bank sub-branches do not even offer U.S. dollar products. For investors thinking of changing yuan to dollars to profit from a rise in the dollar, it is worth it to think twice.

It goes on to suggest investors use QDII products that invest in the U.S. to profit from a rising dollar, though this carries more risk. The one product mentioned is a real estate investment fund from GF Securities. For people traveling abroad, it is suggested to "cash in" now before the dollar gains more strength versus the yuan.

Key point: Chinese individuals can walk into most banks and walk out with U.S. dollars, or put them into a U.S. dollar account. If the Chinese herd decides buying dollars is the thing to do, the move will be incredible.

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