Where to Sell Chinese Yuan

According to Bloomberg the Yuan is heading for its worst quarter on record. The order of the day is not to buy the Chinese currency but where to sell Chinese Yuan.

The yuan’s worst quarterly performance on record is raising the risk of capital flight.

China’s currency has slumped 2.9 percent since the end of March, the most since the nation unified the official and market rates at the start of 1994, to trade near its lowest level in five years. Losses deepened after the U.K.’s vote to secede from the European Union led to a jump in the dollar and dented the outlook for Chinese exports.

After turmoil in its currency and stock markets in the past year shook investor confidence, China stopped granting quotas for residents to invest overseas and clamped down on illegal fund transfers to restrain capital outflows.

Investors are worried that the Yuan will fall even farther which accelerates capital outflow from China. For those holding Yuan where can they sell? Or for those interested in trading the Chinese currency during a volatile period where is the currency traded?

Trading RNB

Where to buy and where to sell Chinese Yuan most easily is in Hong Kong. Foreigners are not allowed to trading in the internal Chinese market but currency traders can still trade RNB. Another nation whose currency can be traded directly with the Yuan is Japan. Deutsche Weld reported when China and Japan began directly trading currencies and not using the USD as an intermediary.

China’s efforts to turn promote the yuan as an international currency have been boosted as direct trading with Japan’s yen has begun. The move ditches the US dollar as an intermediary currency.

China is Japan’s largest trading partner with bilateral trade valued at $345 billion (279 billion euros) in 2011.

Other nations that trade currency directly with China include the European Union, Great Britain, Switzerland, Korea, Australia, New Zealand and Singapore. All of these are markets where you can sell Chinese Yuan as the currency enters free fall.

How Far and How Fast?

The Chinese control their currency and only allow trading internally in a narrow range. However, nations that maintain an official internal rate that is substantially higher than what foreigners are willing to pay end up with large black markets for currencies such as exists in Venezuela. Thus the monetary authorities in China are allowing the Yuan to trade in lower and lower ranges as investors find innovative ways to move assets out of an increasingly sluggish economy with mounting debt issues. The strength of the Yuan depends on the strength of the Chinese economy which is steadily slowing. Reuters reports that a recent uptick in Chinese growth may not last.

Private investment growth has shrunk to a record low, putting more of the burden on state-controlled firms to support economic growth.

Economists have questioned China’s official statistics for years and increasingly turn to private surveys such as the CBB and measures such as concrete, steel or electricity production to better gauge trends in the world’s second-largest economy.

As the miracle economy in the land of managed capitalism fades the question is not when but were to sell Yuan.