Chinese Yuan Valuation

After reading a recent article from the Wall Street Journal, I feel that now is a great time to invest in China.

China is artificially keeping the yuan (renminbi), to slow down the liberalization process that is occurring. The Middle Kingdom has been extremely active trading foreign currencies of late, and has increased its foreign currency reserves by a record level $160 billion during Q3. China held a total of $3.66 trillion of foreign-exchange reserves at the end of the third quarter.

These actions can be surmised as a response to the value of the dollar sliding 2.1% against the yuan, and 1% last year. China doesn’t want to increase the valuation of its money too fast, which is also a way to stabilize potential growth after opening the free trade zone recently in Shanghai.

This is a boon for any long-term investors that have eyes toward the Orient. Buy low, and sell high if you are willing to wait for China to release its grip on foreign exchange. Although it may take some time, the renminbi will assuredly increase in value due to China’s yearning for more of a consumption-based economy.