The Yuan -- a good investment

The Chinese economy has been booming for the past 3 years yet the Chinese currency has not appreciated with the boom. Why? The reason is simple; the Chinese government wants to sell their products to the USA as cheap as possible which helps the Chinese export business immensely. So, in 2008 they decided to peg the Chinese currency with the US dollar and it is still peg today.

This strategy has helped the Chinese economy grow faster than most any other country in the world with their annual GDP (Gross Domestic Product) rate close to 10% in the past 5 years. Though, I think this union of the Chinese Yuan and the US dollar will slowly unwind itself in the near future and, at that time, I think the Chinese Yuan could appreciate 20+ percent.

Keep in mind, the last time that the Chinese allowed for its currency to slowly appreciate against other world currencies was in 2005; it moved 20% higher against the U.S. dollar. We are seeing signs of this occurring today with the Chinese government increasing their interest rate recently to fight their internal inflation issues and also selling off billions of dollars in treasury bonds so they have less debt exposure to the United States. I feel that China is ready to resume greater flexibility with the Yuan.

The Chinese Yuan is at a great price and I am slowly accumulating this currency for my aggressive investors and also adding some for moderate investors as well for diversification reasons.