The Chinese black market is thriving in recent days, most notably in the foreign currency exchange sector. Changing currencies is a quick way to start a new business in China, particularly when operating outside of the scope of traditional banks. Although such a service is highly illegal, the market has been booming in recent weeks and continues to grow every single day.
China’s Foreign Exchange Black Market Is Booming
China is an attractive country with a thriving economy. Or that used to be the case until a few years ago, as exports started to decline. Moreover, the PBOC has deliberately devalued the Yuan value in recent months and will continue to do so. All of this fuels the need for more convenient foreign exchange trading opportunities. At the same time, this also increases the appeal of a black market to fill this niche.
For some unknown reason, the demand for US Dollars has not been greater than recent weeks. Unfortunately, there is only so much foreign currency to go around, and people want the best rates at any given time. The black market will offer better rates compared to banks, assuming people can find a source with enough capital on hand to complete the exchange.
Moreover, Chinese residents are only allowed to buy and sell US$50,000 worth of foreign currency every single year. With the demand for the US Dollar surging, reaching that artificial cap will not take all that long. For those who want to obtain more foreign currency beyond that limit, the black market its the only option for now.
It is evident consumers and traders are dumping their yuan as quickly as possible. Chinese people are growing anxious regarding the future of their national currency, as they continue to lose purchasing power every single month. Moreover, the bullish trend of the US Dollar makes the greenback far more appealing compared to the yuan.
Capital outflows have been a thorn in the side of the Chinese government for quite some time now. Despite their best efforts, they have been unable to curb the outflows in a significant manner. Black market foreign exchange is just one of the possibilities to dump the yuan for more profitable assets. Bitcoin provides an excellent investment opportunity as well, as it can be purchased through regular exchanges with relative ease.
The demand for the US Dollar will continue to increase over the coming months, according to financial experts. The Yuan will continue to decline for most of 2017, based on current projections. Consumers, traders, and investors will flock to alternative financial options, including foreign exchange opportunities, precious metals, and Bitcoin.
JP is a freelance copywriter and SEO writer who is passionate about various topics. The majority of his work focuses on Bitcoin, blockchain, and financial technology. He is contributing to major news sites all over the world, including NewsBTC, The Merkle, Samsung Insights, and TransferGo.