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Comment by akhatri_aus | Hacker News Reader

I find it hard to personally use the CNY/RMB for anything. Money is a special thing and all history is taken into account with risk. I can't realistically imagine my money safe at any point over a hypothetical 50 year timespan, especially considering the interventions in the HKD over the past year or with the RMB/CNY in general.

Imagine asking yourself the same thing about the US Dollar, Yen, even the Australian dollar, Pound over their entire timespan as a floated exchange rate. They've never been any illusions about it, it's WYSIWYG. You can't freely move CNY out of China to start with. Imagine having your savings, or backing your business on such a currency.

I guess eventually it's possible, say after more than 3-5 decades of proof that its a stable currency

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I was in this situation last year. After 8 years of working in China, I had much of my savings in RMB in a bank. I was pretty lazy about moving it out into investments, and since the RMB was appreciating, I didn't feel any pressure to jump through the hoops to do forex.

However, after the initial deprecation last year, I saw the writing on the wall, and got the money out. It wasn't easy, but it wasn't impossible either. Chinese citizens can exchange $50K USD a year, which doesn't seem to be going away, while foreigners can exchange what they earn in China...with proper tax documentation (it took a few weeks to complete my initial forex).

Investment opportunities in China really suck! You have the bubbly real estate market, the insider trader stock market, and foreigners are actually very restricted from doing either of both anyways (we can't buy stocks, acquiring property is tricky, not that I would want to do either). The only reason I kept my money in China was because of the appreciation, investments also weren't doing well at the time.

I can see the RMB being a serious currency..it isn't that messed up compared to say the Venezuelan Bolivar, or many currencies in SE Asia or even the Indian Rupee. Heck, the Japanese Yen is even more volatile, and I would have lost big time if I made bets on the pound or the Australian dollar. But the lack of convertibility, even if only partial, is a big show stopper. They really should make more effort to that, and they seem to have stalled for the last 10 years while walking backwards from the reforms of the early/mid 00's.

Money isn't for investment - it's for trade. A currency's long-term value isn't really important.

Truth, which is why holding the RMB to me was virtually pointless. I should have converted to USD and invested, but at the time investments were doing poorly while the RMB appreciated, so my procrastination saved me money. Can't count on that in the long term.

Money is used for three things - transactions, store of value, and unit of account. For store of value, the long term (or at least medium term) value is quite important.

It was for the first few thousand years of documented history.

I think that's more gold and silver.

Volatility isn't as important as low inflation and the ability of price discovery. I've heard the argument that the Yuan lacks volatility and hence it's stable - on the contrary, it risks sudden massive shocks and they spill out to other countries in other manifestations to compensate for the fixed exchange (or somewhat pegged) rate.

Price discovery is extremely important, even if it comes with volatility. It would be comforting to know that China could reinvest its trade surplus back into the US, which it's not doing well since it's not incentivised to do so, solely investing in Treasury's. This is why we're in a recession, because this cash is a drag on consumption, and its stuck in Treasuries.

Investing in treasuries IS investing in the US, just in a very safe low risk way. That is the value of the USD, at least, that you can always "save it" with the US gov (who is a dependable debtor of last resort). This is super good for the USD, and part of the reason interest rates are so low these days (all that extra Chinese money pushed down rates). With the Chinese stopping to use treasuries so much, one would guess that rates would pop up eventually.

This is true, though I'm sure you'll agree this isn't the best way to recycle a trade trade surplus?

It depends.

The money isn't really the government's...it needs to be somewhat liquid and ready to use elsewhere. Treasuries are fairly liquid (you can't redeem them early, but you can always trade them) and are not very risky (though these days they often have effective negative interest rates).

What about buying Bitcoin?

I don't know the reality of buying btc in China, but there is no doubt that crypto-currencies are enormously powerful for moving money out of countries.

Convertibility is huge.

Earlier this year, my wife and I were in China helping her mom close an old bank account to move the money to Hong Kong (she's been an HK permanent resident for over a decade). It was almost $10k USD worth. The easiest option was to get it all in cash and take it back to Hong Kong. The largest RMB note is the ¥100, which is about $15 USD. Our pockets were stuffed with hundreds of notes. It felt very awkward. Even though it was legitimately our money, I was afraid at any moment I'd be pulled aside and charged with some kind of crime.

So yeah, I don't see RMB as very practical when the largest note available is equivalent to $15. Pretty much necessitates that every moderately large transaction will go through a bank, under the watchful eye of the Chinese government. I can't see many foreigners being interested in that kind of arrangement.

this is actually illegal in china. If you take more than a certain amount of currency out of the country including to HK you need to declare it and fill out a form. Many people get around this rule by walking across the HK border 10 or 15 time in one day carrying the exact max amount of currency. You can also hire parallel traders to do it for you as they are usually crossing back into HK empty handed because most of the time their are carrying goods from HK into the mainland and just returning to get more stuff

HK is a part of China, except when it isn't.

The Chinese border police don't look into money laundering or structuring that much. Much easier to go after the iPhones and milk powder.

We're pretty sure that between us, nobody was over the limit. Still felt sketchy as hell.

Is there an easy way to exchange some USD to RMB online? anybody help?

Not sure what you mean about interventions in the HKD. The HKD is pegged against the USD and it's been that way since the poms were still in power and HK was a colony.

Specifically, since 1983, it has been pegged to the current rate.

HKD is basically the US dollar at this point, and it is fully convertible. Less risk than the RMB, which you should only hold to do biz in China or if you are resident there.

There were interventions in HIBOR last year that leaked into the HKD overnight rates. In effect lots of businesses ended up paying to help China stop currency outflows.

Fiat money should never be used as a savings vehicle. This is why the rich invest in property and ownership in real things. And no i'm not advocating gold.

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