Date
26 September 2017
Mainlanders say US dollars are out of stock even in the black market after investors who cashed out of the stock market rushed to exchange renminbi for the greenback. Photo: CNSA
Mainlanders say US dollars are out of stock even in the black market after investors who cashed out of the stock market rushed to exchange renminbi for the greenback. Photo: CNSA

Mainlanders rushing into US dollar amid yuan devaluation fears

Fears of yuan devaluation amid China’s slowing economy are driving some mainland investors into the US dollar.

Investors are also getting nervous about turbulence in the stock market which has prompted the government to adopt extraordinary measures to stem it.

Apple Daily is reporting that mainlanders have been snapping up US dollars since the stock market plunged in June.

It cites its own reporter as saying a Bank of China branch in Pudong, Shanghai, has confirmed a run on the greenback, with only several thousand US dollars left at the time the inquiry was made.

Chinese residents have an annual quota of US$50,000 and no more than US$10,000 at a time, according to a bank employee.

They have to make an appointment if they want to get the exchange limit.

Some people complained on Weibo, China’s Twitter-like online messaging service, about the difficulty of getting US dollars.

A netizen said a Bank of China branch in Chongqing is restricting sales of the greenback.

Others complained that US dollars are out of supply even in the black market, with traders saying most of the money was bought by investors who had cashed out of the stock market.

Kenny Tang, executive president of Jun Yang Securities, said there is growing speculation that Beijing will devalue the renminbi.

Investors are seeking a safe haven in the greenback, especially as the A-share rout exacerbates worries about a capital outflow anytime soon, Tang said.

In the longer term, however, the renminbi is unlikely to face devaluation pressure unless the United States raises interest rates, he said.

Meanwhile, Bank of America Merrill Lynch said in a recent report it expects the renminbi to weaken by 5-10 percent next year.

– Contact us at english@hkej.com

KZ/JP/RA

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