Use Every China Currency Blog to Your Financial Planning Peril

Criticism of national currency management by governments has been rampant. You can read another side of this story at one of our sister web sites:

A recent development with respect to the currency of China has been its simultaneous appreciation against the dollar, and depreciation versus the Euro and the Yen. Growth of world trade has made major currencies instruments of speculation. Corporations that trade with other countries have always hedged against potential currency losses. However, a market has also developed for investors to buy and sell dollars based on forecasts of how much it may be worth in future. Why does this involve excessive risk for financial planning?

China makes no secret of its determination to set the RMB value against currencies of its important customers and suppliers. The United States and its close allies swear by free market forces. However, interest rate reductions by the Fed have huge swing effects on dollar values. The Oil Producing and Exporting Countries (OPEC) also tend to affect world currency values abruptly. Predicting currency futures is a specialized skill, but is an unreliable business for even the most experienced operators.

It seems best to try to buy and sell in dollars. Booking other currency inflows and outflows at fixed dollar equivalents is another conservative step in this unstable world political environment.