Arbitrage opportunities in Hong Kong RMB cash

Some time of the year, especially when RMB is relatively strong, there exists arbitrage opportunities in RMB cash.

For some reason, Money Exchange on the street consistently selling RMB cash at a lower rate, than the published market price. When CNH is weak, the gap is not very significant, and have no incentive to do any arbitrage.

When CNH is strong, one can buy RMB cash from money exchanges, deposit the cash into banks, and convert the RMB into HKD.

For example, money exchange selling RMB this morning at 1.1628, while Hang Seng are buying RMB at 1.1684, Standard Chartered buying at 1.1688, ICBC buying at 1.1674. One can buy RMB from money exchange on street and sell to banks and take around 0.5% profit.

Usually the daily limit for depositing cash is 20000 RMB, if you do three banks, in theory you can take 300 HKD profit in a morning, without much risk.

If anyone want to do it, please note : calculate the math careful before you execute any transaction, I don't do unless the spread is >0.2%. Check the buying rate and selling rate before you decided to go on. Money market is changing every second, give yourself some safety margin if you want to do anything. Make sure you have the respective bank accounts as well.

I notice a number of people (usually uncles) are doing this, so the bank queue could be lengthy. I suggest do it in MongKok / Wanchai / SheungWan where there are lots of money exchanges and bank branches around so that you can compare the price. Most of the time, it takes less than an hour for me to execute 3 pairs of transactions.

If you have a day off and have nothing to do, it is a good activity, make money and play with your phone while waiting.