Americans can now buy Chinese Yuan

[Lute]

I read an  article in the Wall Street journal (http://online.wsj.com/article/SB10001424052748704307404576080222812076888.html?mod=WSJAsia__MIDDLETopStories) that the Bank of China is allowing people to open Chinese currency bank accounts using US dollars. With the Yuan appreciating at 10% (http://blogs.forbes.com/robertlenzner/2011/02/17/geithner-admits-chinese-yuan-appreciates-10-rate/) this sounds like a good opportunity to a) diversify your currency holdings and hedge against dollar inflation, b) have a good chance to make money relatively safely (almost everyone agrees the Yuan is undervalued). The only catch is that you have to physically go to either New York or LA to do it. I am curious what you guys think about this.

[Mastoo]

Tempting idea, although it crosses my mind your savings might be an easy target the next time china throws a hissy fit about us printing money

[rustyknife]

I think it's a good idea. The only part that stops me is having to go to LA or New York. Seems like the expense of that would offset any potential gain for awhile.

[NotoriousAPP]

Just thought I would provide an update on this topic.  I did follow up on this post and opened an account with Bank of China (BOC).  Here are some of the details of opening an account in case anyone is interested, I will say it wasn't a fast process and took a bit of leg work but it was not impossible and you do not have to be in NY or LA to open one.

-To buy Chinese Yuan you will have to open two separate accounts: one to hold US dollars which always must have a minimum balance of $500; the second is to hold Chinese Yuan, I don't remember there being any minimum balance for this account.  There are no fees to open or maintain either account and they both earn interest.

-You can open an account by mail, you do not need to be in LA or NY to open an account although it would be easier to do it this way.  Call the Bank of China New York Branch and tell the operator that you want to open an account by mail, she'll transfer you to the person responsible for this.  Note,  you must call the "New York" branch, there is also branch in China Town but you can't open an account by mail at this branch.  Contact info for the "New York" branch is here: http://www.bocusa.com/portal/Info?id=362&lang=1&. 

-I had a lot of problems getting a hold of a person to speak to, I always got their voice mail so I sent them an email as well and they replied with all the forms I needed to open an account by mail.  The person that sent me the forms was named Qing Liu, there email address is  qingliu@bocusa.com

-You will need copies of your identification and very important, every page of the application and the copies of your personal identification must be notarized.  The people at my local bank that notarized the documents for me thought this was strange but the Bank of China will not accept it any other way.

-You mail back all your notarized application pages and notarized copies of personal identification to the Bank of China "New York" branch along with a check to open the US dollar account.   

-BOC will first open the US dollar account and send you a receipt and bank statement that the check was deposited in your new account.  Shortly after they will open the account to hold Chinese Yuan and transfer/convert into the Chinese Yuan account the amount of dollars you specified in your application form.

-You will receive monthly statements in the mail for both your accounts.  You can send in additional funds at any time to your US dollar account and specify how much you would like converted and transferred to the Chinese Yuan account.

Hope that helps, let me know if you have any questions.  Good luck.

[Mastoo]

Great info.  So you opened their Personal RMB deposit account then?  How do you get money in and out of the account?  Does it pay interest?  Those exchange limits apply to your RMB account also, the $4K per day and $20K per year I think it was?

[FreeLancer]

How confident are you the Chinese stop pegging to the dollar?  I guess the down side is low, but seems like there is some lost opportunity risk, especially when compared against stronger floating currencies.

[NotoriousAPP]

Mastoo:  There is no maximum per day or year.  I asked them that question and they told me that was the policy but it's not anymore.  I'm sure there is a limit somewhere ($100k/day, $1M/day, etc.) but I'm not working with that kind of money.  I get money in and out of the account by calling and asking them to transfer money from my Yuan account to my USD account, from there I can move money electronically via money transfer or wire.  You can access your account online but I haven't set this up yet so I'm not sure if you can see both the CNY and USD account information but I don't see why not; you would at least be able to see the USD account info.  Note, there is no fee to move money back and forth between the CNY and USD accounts.

FreeLanceR:  Regarding the Chinese pegging their currency to the dollar.  That's fine by me for the time being, I'm hedging against them stopping this policy sometime in the future.  This is just another way for me to diversify my portfolio.  I have plenty of USD cash sitting in a bank collecting 0.7% interest, why not get the same while holding the same amount of dollars in Yuan and collecting interest.  The money has to sit somewhere.  The fact that the Yuan is pegged to the US dollar can be a bit misleading....I think.  It is pegged to the US dollar but the exchange rate fluctuates slightly.  For example, look at the exchange rate for the Yuan vs. USD for the last 6 months, the amount of Yuan that 1 USD can buy has steadily decreased.  http://www.exchange-rates.org/history/CNY/USD/G.  Someone please correct me if this statement is in error.

[FreeLancer]

I think you're right, looks like there has been a slow steady decline in the dollar compared to the yuan.

[Dan Forrester]

What interest rate are you getting on your RMB account?  Must you always keep $500 in your USD account or do you first open a USD account and once opened you can transfer the original $500 plus whatever you want into the RMB account? 

What do you guys think of holding actual paper RMB if you can get your hands on it?

Thank you very much NotoriousAPP for the work you have done.

Dan

[NotoriousAPP]

I don't remember what interest rate I'm getting but I'll check into that.  I remember it being something small similar to any big bank rate and smaller than a credit union rate.  I'll report back when I find out.

You do always have to maintain a minimum $500 balance in your USD account at all times.

I wouldn't mind holding some RMB currency but I don't know how you would do this.  To be honest I would rather hold gold or silver.  Here is a short paragraph regarding exchanging/obtaining CNY, it seems they don't want their currency leaving the country:

At present
          ,the RMBis not exchangeable on the international market, so it is only
          usable within the country. So when you are changing money, don't change
          too much, because it is difficult to change back into other currencies.
          To change RMB back into your home currency, you must retain the exchange
          slips that are given to you at the bank or money exchange counter. Then
          when you want to go home, you have to bring the slips with you to prove
          that you are merely changing back money you haven't spent instead of
          taking out needed foreign exchange.if you lose the slips, you can change
          on the black market (locations vary , ask a Chinese friend for details),but
          the exchange rate is not so good.and of course it is illegal.

[Dan Forrester]

I was watching Jim Rogers on some youtube video and it seemed as if he was saying that he actually brings back paper money when he heads over there.  I’m sure this is in addition to setting up accounts such as the one we are discussing.  I was in China last summer and brought back a little over $400 that I just had sitting in my wallet.  I figured I could just go down to the bank and exchange it for USD if I needed to.  After I returned I started reading up on the RMB and have been interested in investing in it ever since.     

Thanks again for all the info,

Dan

[NotoriousAPP]

I would imagine with the olympics recently being held in China a lot of their paper currency left with the visitors.  I'm just not sure how you would change it back to USD or any other currency.

[Dan Forrester]

I tried to send an email to the address you specified above: xxxxxxxxand it got kicked back.  Do you have another email address?

Thanks, Dan

Edited for member privacy. Please use PM to exchange email addresses if desired.

[NotoriousAPP]

Dan:  That's odd, maybe he doesn't work there anymore, I copied that email address from the email he sent me with the forms.  I still have then email he sent me with the attached forms that I used to open my account, I'll forward them to you if you want to send me your email address in a PM.  Feel free to use them or contact the bank to have them resend them to you.

Sorry for the delay in reply, I'm not getting any notifications when this topic is replied to.  Seems to be the case for all my forum posts. 

[BusyBee]

Hi All:
I'm new to the forum and some aspects of survivalism. 

My question - why wouldn't you just go to the bank and get yuan to hold?

I have been considering the above and was just interested in learning what you think about the pros/cons of holding the paper currency vs opening an account?

Thanks,
Sharon

[Dan Forrester]

NotoriousAPP:  I have sent you a PM with my email.  Thanks for all the help and work you have done.

BusyBee:  The only way to get RMB (Yuan or Renminbi) is to actually fly to China and get some and take it out of the country.  This is illegal according to Chinese law I believe.  They do not want their currency to leave the country. 

Having said that I crossed the border last summer back into Hong Kong (which uses it’s own Hong Kong Dollars) with about $400 in RMB (about $60 USD) so I don’t think they are too tight on it.  I didn’t know at the time it was so tightly controlled.  You can’t just head down to the bank and pick some up or trade it on the Forex Exchange.  However in the next couple years I think that might all change.

I was just at the bank an hour ago and brought along a $100 Yuan note and asked them at Wells Fargo if they could convert it into USD.  They didn’t seeme to know what to do with it and she started asking around and said she would need to call someone.  They were very busy and I told her I was just curious more than anything and didn’t want her going out of her way while they were so busy.  I’ll check back on a slower day and let everyone know.

Next time I’m over there I might bring back a couple thousand Yuan and just stash it in my safe.   

Dan