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Old 01-06-2013, 11:13   #221
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Join Date: Apr 2005
Location: Near Chicago, IL
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Originally Posted by Patchman View Post
As for RMBs, I actually have several thousand RMBs at home (long story with my child) when the conversion rate was about 8 RMB to the USD. Now I see it's a little above 6 RMBs to the USD. Basically, that little "mistake" turned into a 25-percent return.
No, it hasn't. You haven't gotten a "return" yet.

You held a small amount of a foreign currency (in paper notes, I assume) and the exchange rate changed. But if you went back to China to spend it, the same amount of paper currency would buy roughly the same amount of stuff.

You haven't earned a "return" until you convert your RMB holdings back into USD. If for whatever reason you can't convert your RMB to USD, you've earned a -100% return. You can't count something as earning you a return unless you can convert it into something you can spend, and you can't spend RMB here in the US.

I used to get paid in USD, CHF and Euros all at the same time. The exchange rates between the three fluctated, but I didn't care. You know why? Because I used my Euro paycheck to buy Euro-denominated stuff, my Swiss Francs paycheck to buy CHF-denominated stuff, and my USD paycheck to buy USD-denominated stuff. When the Euro increases 10% against the USD... my US mortgage payment doesn't change. I still get paid the same number of US dollars, and I write a check to the mortgage company for the same number of US dollars. If I converted my Euro paycheck into USD to get "more" dollars... then how would I pay my bills that are in Euros, like my French car insurance payment?

Look, if you want to be a currency investor go for it. There's no reason why you'd need to be paid in RMB in order to do so. If you think that Euros or RMB are going to strengthen, go buy some--you don't need your employer to convert your paycheck for you.
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