Not being an expert in the subject of foreign exchange and doing it as an investment strategy, my colleague and I stuck up and discussion. He wants to buy Chinese RMB now and sell them at after China floats the currency. SO will he make money or lose money?
For ease of understanding I used simple numbers to determine what will happen.
Suppose US$1 buys RMB$10
Therefore for US$10 one can buy RMB$100
Now if the currency is devalued the exchange rate should change…
Now US$1 buys RMB$20
So if I sell my original RMB$100 / 20 then I have lost half my value in $US and now have US$5
On the other hand if the exchange rate goes the other way I make a profit.
US1$ buys RMB$5 then my original RMB$100 is now US$20
Why don’t you google this or something, you sound a little bit like some stoned person coming up with what he thinks is a great idea.
First off the exchange rate has been 8.2RMB to buy 1USD for as long as I can remember. Second, the RMB will be increasing in value not decreasing, but nobody knows when. In the future maybe 1USD will only buy you 6 RMB. Understand. So go and buy some RMB if you want. No you can’t buy in Taiwan and I think you shold go rent the movie Red Corner with Richard Gere before you try to take much money out of China. By the way, it is not even easy to get USD out of China. Do some research. So many companies in China have setup triangle trading businesses to get money out of that Communist country with no rule of law. Go buy some real estate or stocks in the USA and you should get some better returns. Don’t trust the Chinese.