Thread: Chinese bank lets U.S. customers buy, hold yuan

Chinese bank lets U.S. customers buy, hold yuan

Updated 18m ago
By Joe Mcdonald, AP Business Writer

BEIJING — A state-owned Chinese bank says its New York City branch has begun offering accounts denominated in China's tightly controlled yuan in a move to expand the currency's global reach.

Bank of China says customers of its Chinatown branch in New York will be allowed to trade yuan for dollars and can wire yuan to or from China.

In a statement on its website, the bank said account holders can exchange up to the yuan equivalent of $4,000 a day, with a limit of $20,000 a year; the limits are half those levels for non-account customers.

"They are trying to expand the scope of people who can hold renminbi (yuan) and that increases demand," said Daniel Hui, a foreign exchange strategist for HSBC in Hong Kong.

Still, Hui said Chinese restrictions on money flows into and out of the mainland mean foreign customers who want to trade yuan will be limited to the Hong Kong market and currency available there.

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Bank of China's announcement comes ahead of Chinese President Hu Jintao's visit to Washington next week. The White House says President Barack Obama will press U.S. complaints about China's currency controls that critics say keep the yuan undervalued, which boosts Chinese exports and swells the country's multibillion-dollar trade surplus.

Beijing is trying to reduce reliance on the dollar by promoting the yuan, also known as the renminbi, for trade and finance. It is promoting Hong Kong, a Chinese territory with its own currency, as an offshore market for foreigners to conduct yuan business separate from the mainland, which is kept isolated from global capital flows.

Hong Kong banks began handling yuan transactions with the mainland last year and the World Bank and some foreign companies have sold yuan bonds.

Employees who answered the phone in the bank's Beijing headquarters Wednesday refused to give any other details.

China is the world's biggest exporter and the second-largest economy behind the United States, but its exporters receive mostly U.S. dollars for their goods. Being paid in yuan would help them eliminate uncertainty about exchange rate changes. It also might help to promote China as the center of an Asian regional trading area.

China's leaders have said they will eventually let the yuan trade freely but say relaxing controls too abruptly would damage its financial system. They say a rapid rise in the yuan would hurt exporters, wiping out jobs.

Beijing promised more exchange rate flexibility in June and the currency has risen by about 3.5% against the dollar since then. Analysts expect another 5% gain this year but that is too low for U.S. manufacturers and others who say the yuan is undervalued by up to 40%. The U.S. Senate is considering a measure, already approved by the House of Representatives, that would allow Washington to sanction governments such as China if they are found to be manipulating exchange rates for trade advantage.

Economists say the process of making the yuan an international currency on the level of the U.S. dollar, euro or yen will take years and depend on factors such as how many foreign companies want to use it.

China's central bank governor, Zhou Xiaochuan, called in 2009 for a new global currency managed by the International Monetary Fund to replace the dollar for trade and storing reserves. Economists say such a change is unlikely, but the comments reflected Beijing's unease about the dollar, which it uses for the bulk of its trade and to store an estimated one-half of its $2.5 trillion in reserves.

"The next big step will be sanctioning and regulating renminbi trading in other markets besides Hong Kong," Hui said. "But that won't happen in the near-term."

http://www.usatoday.com/money/world/201 ... yuan_N.htm

Investing in Iraqi dinar: Source of quick riches or too risky?

Q: How can someone track the value of the Iraqi dinar currency, and it a good investment?
A: During a time some investors are losing faith in major currencies and buying gold for protection, many readers are asking about the Iraqi dinar.

After the defeat of Sadaam Hussein, the Iraqi dinar has been a constant target of speculation by investors wondering if the currency could be a source of quick riches.

Speculating on the currency of a defeated nation goes beyond the scope of this column. This is a place to discuss long-term investment strategies, not speculation. After all, horse racing and gold mining aren't covered here either. Investing in the Iraqi dinar is a huge gamble, and one in which you should be prepared to lose all your money.

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With that said, there is a value for all investors to know how to look up the current and historical values of obscure currencies, such as the dinar.

You can get the latest value of a variety of currency at USATODAY.com's currency page and currency converter calculator.

Foreign exchange trading and currency information website oanda.com provides tools, for free, to investors who want see the value of a currency and track its historical movements.

It's easy. Just start at Oanda's historical exchange rates page.

Enter the currency you'd like to convert from and the currency you'd like to convert to and provide a time frame. Click the Get Table button and you'll get access to all the historical information you're looking for, even on a smaller currency like the dinar.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Follow Matt on Twitter at: twitter.com/mattkrantz

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