On: Reasons to Open a Chinese Bank Account

[borism]

The above discussion makes little sense.

By maintaining USD peg China has no independent monetary policy - it's monetary policy is directly influenced by Federal Reserve.

[cynicalkane → borism]

China, not the Fed, has ultimate control over their monetary policy. They can always change their monetary policy and probably will have to. Which is what the discussion is in fact about, if you read the original article.

[borism → cynicalkane]

China, not the Fed, has ultimate control over their monetary policy.

sure, but since 1994 they haven't really exercised that ultimate control:

http://en.wikipedia.org/wiki/File:1_RMB_to_US_dollar.svg

and despite all promises to the contrary last year, they are still not exercising it to any substantial extent:

http://www.google.com/finance?q=NYSE:CYB

[yummyfajitas → borism]

If the Chinese keep up their peg, holding RMB is equivalent to holding dollars.

If they fail to maintain the peg, the RMB will most likely rise. Most US consumers are already exposed to the downside of this risk - they have expenses which will rise if the RMB goes up (e.g., all the goods they purchase which are made in China).

Holding RMB is a hedge against this.

[borism → yummyfajitas]

Tell me more about it :)

I myself have a Long Straddle on CYB since some time last year, betting that it moves in either direction.

Let's just say hoping to make guaranteed profit cause chinese promised it isn't such a great strategy :)

They have 1 week more to move though, just in time for Paramount Leader's visit to D.C.