The next time you're in New York City ( Renminbi denominated bank accounts )
In other threads, the issue of Americans 'hedging' purchasing power loss risk of their US dollars has been discussed at length. In general, the ability of 'small time' American investors to limit the purchasing power loss risk of holding the vast majority of their assets in US dollars has been limited by high minimum buy-in amounts, by 'commodity' trading qualification requirements etc. However, there is now a brand new alternative available ...
(snip)"In its latest step to make the renminbi a competing global reserve currency, China’s predominantly state-owned Bank of China will now let individuals open renminbi savings accounts… in the United States.
Effective immediately, BOC’s US individual customers can now open a renminbi denominated savings account with a $500 equivalent minimum balance. The bank also offers certificates of deposit in 6-month and 1-year terms with a minimum of $1,000 equivalent.
The account opening procedures are simple– there is an application form, a W-9 tax form, and a signature card. Applicants are also required to provide a government-issued ID and one other form of identification such as a credit card, employee ID card, insurance card, etc. You do have to show up in person.
Businesses can also open renminbi accounts with a $5,000 equivalent minimum and requisite entity paperwork like Articles of Organization, etc.
At this time, renminbi cash cannot be withdrawn from the account, though I would expect this to change eventually. The bank does provide currency exchange services between dollars and renminbi at its Chinatown branch in New York; current limits are up to $4,000 per day, and $20,000 per year.
China doesn’t do anything overnight, and I believe the government is executing a long-term plan to make Shanghai the world’s leading financial center… and as a part of that plan, for the renminbi (or some derivative) to become a fully-convertible competing global reserve currency.
We’re already seeing significant signs of this– many sovereign nations are holding renminbi in reserve instead of just dollars, and Chinese cross border settlement is now frequently being transacted in renminbi instead of dollars because of new clearing and settlement platforms that have been established in Hong Kong."(snip)
from
considering that the relative value of the renmimbi ( a.k.a. Chinese Yuan ) has increased more than 6% against the US dollar over the last 6 months ...
http://www.x-rates.com/d/USD/CNY/graph120.png
... depositing money in a renmimbi denominated US bank account is likely to provide a significantly better overall rate of return than an equivalent US dollar denominated US bank account - in the short term at least !!!
For those who may be unfamiliar, let me throw out a graphic example. Let's say you have an extra $1000 in a US bank account. If you open a renmimbi bank account in NYC with an exchange rate of .153 then your US$1000 exchanges to RMB6536. Six months later, even if a ZERO interest rate applies to that bank account, your RMB6536 balance will convert at perhaps .161 = US$1052 ! In essence, this amounts to the equivalent of 10% annualized interest on a passbook savings account !!!
Of course there is risk that the US dollar exchange rate could move in the opposite direction ...
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