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Revealed: where readers stand on RMB risk

Revealed: where readers stand on RMB risk

Where there is opportunity, there is also risk but with the RMB, there is also the unknown spurred mostly by political uncertainty. 

However, our latest readers poll revealed a slim majority voted in favour of the Chinese currency as a ‘risk off’ trade.

Against all currencies except the dollar, 41% voted that the RMB was a ‘risk on’ trade while 59% voted that it was a ‘risk off’ trade.

China’s currency is a hard one to call as its exchange rate, whilst de-pegged since 2005 from the US dollar, is not freely floating.

Its managed exchange-rate has fuelled an ongoing currency war between diplomats, lead mostly by the US.

At the World Economic Forum in Davos this year, Li Daokui, a member of the monetary policy committee of the People's Bank of China (PBOC) told the Chinese news service, Xinhua:

‘The renminbi exchange rate has probably caused the biggest misunderstanding between China and the world.’

‘Perceptions about the renminbi exchange rate in the international community are absolutely groundless, as the yuan is probably the only emerging economy's currency that has been rising against the US dollar since August last year,’ said Li.

Speaking at the same time and in the same Swiss city, US treasury secretary Tim Geithner called for China's currency 'to match its fundamentals.'

'I hope that China will do more to exchange rate flexibility and speed up the pace,' he said.

In the past twelve months to date, the renminbi strengthened over 4% against the dollar. Against the euro, it appreciated more than 6%.

This poll will be conducted again in six months and it will be interesting to see whether there will be clearer calls then.

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