Exchange Rate Now!

This time round, even the International Monetary Fund has chipped in to say that the Chinese Yuan should be adjusted (re-valuated).

The proponents – United States and India. The opponents – Only China.

The proposition of proponents – Re-valuating the Chinese Yuan will solve the trade imbalance – currently, the United States vs China deficit stands at about 62.4%. This is staggering as much of the imports for Chinese products into the United States translates into revenue for the Chinese. And as long as the revenue streams come trickling in, the China economy will continue to grow – at the expense of the United States.

The cold war between the United States and Russia had already passed with the collapse of the Berlin was in 1989. This time round, the economic cold war between United States and China will be more prolonged (more…)

The RMB exchange rate seldom fluctuates against the US Dollar, which indirectly implies that the Chinese government tightly controls the value of the Chinese Yuan (also known as the Renmimbi, RMB). Therefore, there is no good time to really aim for the best exchange rate for RMB, with the RMB oscillating around a narrow band against the US Dollar. RMB/USD exchange rate hardly seems exciting for forex traders – this despite the very fact that in 2005, the RMB-to-US-dollar pegging system is being switched to a basket of foreign currencies rather than against just the US Dollar. 

With Chinese exports still steadily increasing despite concerns over quality, there is a fear that the Chinese Central Bank will continue to devalue the Renminbi to further drive Chinese exports. This possiblity cannot be ruled out, even through further depreciation of the Chinese Yuan/RMB is likely to be a series of minute downward adjustments.

At present, the global economy has just started resuming a growth trend after experiencing the worst financial crisis of the century. The prospects for a total revival still remains unclear, as uncertainties over the global financial markets have increased (more…)

The Hong Kong Dollar (HKD, HK$, “Hongkers” – informal name) is pegged to the US Dollar (USD). The initial conversion rate was 5.085 Hong Kong Dollar to 1 US Dollar in 1972 but the H.K. Dollar has since been floated to a current band of exchange rate between 7.75 HKD/ 7.85 HKD = 1 US Dollar. This represents a maximum variance of 1.29%.

To the average tourist between United States and Hong Kong – there is hardly any need to forecast the trend of US Dollar/Hong Kong Dollar exchange rate. You can simply convert either of the currency just the day before you travel, and rest assured that it will not matter materially if you had converted your currency 6 months ago or even earlier. This bode well for Hong Kongers studying in the United States, as a stable peg of Hong Kong Dollar means that it is easy to forecast and budget your study expenses. Similarly, Hong Kongers working in the United States will not be exposed to the currency fluctuations that can relatively reduce your pay against a basket of foreign currencies.

There is no fear that speculative trading will destabilise the trading band of the Hong Kong Dollar compared to the US Dollar (more…)