http://www.smartmoney.com/investing...ese-bank-account-1295020996110/#ixzz1Hd8I3I5m Do You Need a Chinese Bank Account? We're perfectly happy eating in a Chinese restaurant. But will we start banking in a Chinese bank? It's not as crazy as it sounds. As The Wall Street Journal's Lingling Wei reported Wednesday , the Bank of China here in the U.S. has started allowing American customers to open an account and to invest up to $4,000 per day â and a total of $20,000 a year â in Chinese yuan, or renminbi. Until now, you had few options to hold money in yuan, which is a "closed" currency managed, and protected, by Beijing. The bank has three U.S. branches â two in New York, and one in Los Angeles. You'll have to fill out paperwork to open an account and provide two forms of ID. And there's a minimum deposit of $500. Is this a good idea? You may wonder why anyone would do this. Investing in Chinese currency may sound like something best left to speculators. But in reality this may be no more exotic than, say, Peking duck. Holding some of your money in Chinese currency â as part of a diversified portfolio, as they say â might be a very sensible move for all of us. Why? Five reasons. It's very unlikely to go down. It's very likely to go up. You won't miss out on a lot of interest elsewhere, as nowhere else is paying a lot of interest. It will diversify your portfolio. And, finally, it may offer you and your family something of a hedge against the decline of the U.S. economy. Let's take these in order. â¢ First, it's very unlikely to go down. Of how many investments can you say that? The yuan has very little room to fall farther because it is already seriously undervalued. Beijing has spent hundreds of billions of dollars keeping the currency artificially cheap for years to boost exports. What's the discount? Nobody really knows for sure. But right now each yuan costs about 15.1 cents. Most economists say fair value is somewhere north of 18 cents â and maybe a long way north. According to the International Monetary Fund, the value of the yuan in real, purchasing-power terms is about 27 cents. Whatever the details, one thing is clear: Anyone buying yuan today is getting a pretty decent margin of safety. As a kicker, the Bank of China U.S. accounts also come with FDIC deposit insurance, which will protect your deposit from outright forfeit if the bank were to fold (though not from exchange-rate fluctuations). â¢ Second, it's very likely to go up. Why? China is growing rapidly, is a manufacturing powerhouse and is running an enormous trade surplus. Countries like that usually have very strong currencies. Think of the Japanese yen, or the old German Deutsche mark. And these days, a rising yuan may be in Beijing's interest. China no longer has the same need for such an artificially cheap currency. After all, the plan worked: It has now taken over a vast amount of manufacturing from the U.S. And it's moved up from making socks and toys to iPads and, now, stealth bombers. (You could argue the main thing the U.S. got in return was a housing bubble caused by artificially low interest rates.) Based on purchasing-power parities, the Chinese economy is now expected to overtake that of the U.S. within six or seven years. Meanwhile, China's artificially low exchange rate is starting to backfire at home. Politically, the country is under international pressure to rein in its huge trade surplus. That is sure to be an issue when Chinese President Hu Jintao comes to Washington next week. But, more importantly in Beijing, the low exchange rate is also backfiring economically by fueling inflation. This is pouring gasoline on a Chinese economy that is already overheating. Beijing is trying to tamp down the fires. Letting the exchange rate rise more quickly will help. It ought to happen, so it's reasonable to guess it probably will. In the past five years, China has already allowed its currency to rise 25%. It may have plenty more room to go.