02.11.09
What’s going on with Renminbi (RMB) direction?
Trying being white and walking into a Bank of China on Shanghai’s Nanjing Road or other commercial center. “Hello, money change, 换钱” is a greeting you’ll get. Usually it’s a passive effort by one of the 2 or 3 dudes in black plether jackets congregated near the doorway.
The last few days, though, I’ve noticed them getting aggressive. On February 5th, I was identified by them well before I got to the bank’s door, and one guy walked along with me giving the standard greeting but with much more urgency in his voice. Dismissing him, but before inside the bank, another guy gave me the same pitch, and actually walked one step with me inside the bank. Once safely inside the bank, I looked out and saw yet another guy pacing around like a caged tiger and clutching a huge stack of crisp RMB notes.
Are they trying to dump their RMB? Do they know something? Is RMB depreciation on the way?
After I completed my bank business – which did not involve “changing money” – I stepped outside and asked one of the guys why they were trying so hard to actively change money. Did they expect the RMB to depreciate? The response – an adamant, “no, it’s going to appreciate.” To that I said well, “I’ve heard a rumor that it’s going to depreciate”, which was met with an emphatic “Impossible! bu keneng!” and a dismissive wave of the hand.
In truth, I hadn’t heard any such rumor, except commentary and my own view that now is probably a good time for PBoC to devalue if they want to go that course. It’ll help boost exports, as the explanation goes, and really what is the US going to do about it given its problems and how much it needs China’s help generally? Anyway, here’s the rumor – a recent report by the Ministry of Finance saying that the rate should go to RMB 6.93 = USD 1, a modest loss compared to the current rate of about RMB 6.83 = USD 1.
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