Careful investors are watchfully waiting to see what will happen with the RMB over the next couple of months.

As the Chinese government is the largest holder of US T-bills (there was a recent news article indicating otherwise, but by combining holdings between the Mainland and the Special Administrative Regions, it still is the largest holder) as well as the controller of its currency.  For the government, a balance has to be struck between the value of China’s t-bill holdings (government investment) and the welfare and 购买力 (gou4mai3li4 – purchasing power) of its citizens.  A successful 对冲 (dui4chong1 – hedge/[hedging]) strategy must be struck.  One individual strategy I heard was to use one’s RMB to buy 黄金 (huang2jin1 – gold) or 白银 (bai2yin2 – silver) and keep it in a 保险柜 (bao2(3)xian3gui4 – safety deposit box).  What this does is it permits a liquid holding which is independent of the prices of currency.  From there, depending on what happened in different 领域 (ling3yu4 – region), one could rapidly convert his/her gold/silver into the target currency, wait until a trend develops with both the price of the heavy metal and the direction of one of the currencies, and then convert from the metal to the upward-trending currency.  However, this requires keen reading into 宏观趋势 (hong2guan1 qu1shi4 – macro-scale trends), which is not a common skill.  A recent analysis by the Financial Times noted that the Chinese government has arranged this currency move ahead of the G20 meeting.  The Chinese government will not 屈服 (qu1fu2 – give in [to demands]) when there are high-speed backroom arrangements made at international meetings.  Doing it before the meeting increases sovereignty in decision making.  In the meantime, anyone working in the mainland who travels frequently to the US should opt to be paid in RMB.  It could end up being a daily 提升 (ti2sheng1 – raise), now that’s a reason to work overtime!