[As a] "French citizen, working in China and living in the Philippines, my pay was switched from Euro to CNY early 2010 and I don't regret it! Nevertheless, you may warn the subscriber about the transfer of money out of China: it's not a simple matter, it requires you to go to the bank with plenty documents (monthly income tax statement, employment contract, etc.). For simplicity, I've finally taken the option that my company transfers automatically, every month, a big chunk of my salary to the Philippines (this option does not require me to go the bank anymore), and the CNY are used to purchase USD before the transfer to the Philippines, and then I transfer the USD into PHP.

"By the way, talking about the CNY/ USD exchange rate, you may have noticed the strongest rally by the CNY in a while (it had not been above the MA200 for the past 20 years)… Would that be linked to the current "QE" in China that you mentioned? Any thought for the longer term and for a broader implication on Asian markets?

David Fuller's view Thanks for sharing your experience on a topic certain to be of interest to some other subscribers working and living abroad.

The weekly chart that you included, reproduced here, actually shows USD/CNY. Consequently, the USD has just seen its best rally against CNY since China's massive devaluation in January 1994, an event which contributed to the Asian financial crisis a few years later.

CNY is a managed currency, so I think China's monetary authorities are signaling that inflation is less of a problem today and that they are currently more concerned about partially reversing the country's current decline in GDP. The contributing factors are China's previous monetary tightening to rein in property speculation, plus weaker demand for the country's goods from the west. China is now easing monetary policy in an incremental fashion but overseas demand for its exports remains soft. A temporarily weaker CNY would ease cost pressures for China's beleaguered manufacturers.

The chart of USD/CNY above shows that the renewed downtrend since September 2010 has been broken following the early-May low at C6.2769. This confirms a low of at least near-term significance but it could easily become a medium-term low. The next test for USD strength against CNY and other Asian currencies is likely to occur when global GDP growth picks up, stock markets rally and the USD loses some of its 'safe haven' appeal.