Dollar Loses Luster
Among the Chinese
People Flock to Convert
U.S. Currency to Yuan
Amid Fear of Revaluation
By PETER WONACOTT
Staff Reporter of THE WALL STREET JOURNAL
November 18, 2004; Page A16
SHANGHAI -- The long lunch-hour lines at this city's downtown Bank of China are filled with people who not long ago stuffed their accounts with U.S. currency. Now they are dumping dollars.
Yuan Man, ticket No. 252 in line, has set aside more than $50,000 to support his son's dream to study in the U.S., but regrets not holding a stronger euro, or even a firm yen. Ron Chen, an Australian pharmaceutical executive, is paid monthly in dollars and converts each paycheck immediately into yuan. A middle-aged woman and her elderly mother sit nearby awaiting the arrival of an overseas wire transfer. They, too, plan to get rid of their dollars the same day.
"The dollar doesn't mean anything anymore," says the woman.
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Meanwhile, China's central bank has scrambled to buy dollars from ordinary Chinese who are selling them, to the tune of $20 billion in the first six months, according to an internal report from the State Administration of Foreign Exchange.
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At a closed-door meeting in Shanghai this month, banking regulators expressed concern about these developments. "The exchange rate is facing a lot of upward pressure," said Wang Zili, the deputy director at the central bank's branch in the southern city of Guangzhou, according to the minutes of the meeting. "Foreign reserves are increasing too quickly. A lot of capital is coming in through the black market betting on the yuan." |
