As we know, the Chinese RenMinBi (RMB) is artificially suppressed by the central bank to make export attractive to other countries. China’s growth is fueled by her exports and hence, a rising RMB will lower demand for her goods and in turn, hinders economic growth. Many months back, US has pressured China to allow RMB to appreciate. On 21 Jun 10, China finally bucked and let RMB appreciates 0.4% against the dollar. However, most analysts expect the RMB will gradually appreciates.
Now, knowing this and having some faith that the RMB would be appreciating in the future, how do you capitalise it? The obvious way for Singaporeans is to convert your Sing dollars to RMB. But because RMB is controlled, you cannot so called “buy RMB”. Bank of China (Singapore) has a solution for us. We can actually open a RMB fixed depoit account and of course, the currency is denominated in RMB.
The requirements were less attractive when I first checked. Minimal deposit of SGD10,000 and minimal 1 or 2 years (cannot remember). Now, RMB3,000 is the minimum deposit and you can choose a time period of 1 month, 3 months or 6 months. Interest rate for RMB200,000, will be 0.25% (1 month), 0.35% (3 months) and 0.45% (6 months). Anything less than RMB 200,000 will yield a lower interest rate.
I think this is sensible when you have extra cash sitting around. This should not be your emergency funds or money that you need to use. This money should also be on top of your primary investment like stocks and properties. In my opinion, this option is best for money that you want to keep liquid and safe, yet do not need to use them. Safe in the sense that it would not go below the principal sum. Although the bank would be paying interest, the objective of this time deposit is not to collect interest but to aim for capital gain with the appreciation of RMB. One has to be clear about that. Nobody will know how much RMB will rise and that is the risk you have to bear.
Singaporeans, PRs and foreigners are all eligible to open this RMB Time Deposit account. You just need to bring along your IC to any branch. They accept cash or cheque. The exchange rate and interest rate will be calculated the day they receive the money (hence, it depends on when the cheque clears).
Banking Hours: Monday – Friday 9:00 – 15:30, Saturday 9:00 – 11:30
See BOC website for location of branches.
*Disclaimer: I am not recommending you to do invest in the above product as your situation may not be suitable. Just sharing my opinion.