THE Lunar New Year is nearly upon us and people all over Beijing are busily preparing for the festivities, with flour being bought for the traditional dumpling feast, mahjong tiles dusted off for the all-night clattering session and renminbi being dumped in case there is another devaluation.
This year, rumours of a significant devaluation have been particularly virulent, with suggestions that the renminbi eventually will move from its current official rate of 5.75 yuan to the US dollar to 10 or even 11 yuan to the dollar.
Speculation reached fever pitch last week with both the black market and swap market rates jumping to their highest levels for more than three years.
At one point, the black market rate reached 8.1 yuan to the dollar and it was reported that some swap centres had actually run out of dollars because the demand was so great.
The gap between the official rate and the black market rate also widened significantly, up to 30 per cent last week as rumours of a major cut in the official rate persisted.
Many joint-venture hotels, which for a long time have accepted renminbi at the same rate as foreign exchange certificates (FEC) have started to demand payment in FEC again because of the disparity on the swap markets.