PT, east London

On July 21 this year, China abolished the dollar peg that had been keeping the value of the renminbi, or yuan, at an artificially low level in favour of using a basket of currencies to determine its future value.

The US dollar, euro, Japanese yen and Korean won are now the references that China’s central bank will use when monitoring and updating the renminbi’s value. A smaller proportion of the basket will be made up of the British pound, Thai baht and Russian rouble.

With Shanghai expected to become popular with investors following the revaluation, and the beginnings of a building boom, prices in the region are expected to rise with demand.

Due to the fact that China’s mortgage market is viewed as unsophisticated at present — the only official product available is an annually adjustable mortgage, with the rate set by the People’s Bank of China — expect to pay for your property in cash. You will have to exchange your sterling either into the Chinese renminbi or, as is more generally used, the US dollar. You could use your bank or buy through a foreign-exchange broker, who can offer a favourable exchange rate and market updates.

It would be worth looking at fixing a forward contract for the balance of your property, which would allow you to fix your currency cost and safeguard against any further revaluation of the renminbi or the possibility that the US dollar might strengthen again should oil prices and the American trade gap lessen significantly. You will generally be required to pay a 10% deposit to reserve your currency. This way you can continue earning interest on the other 90% at a higher level in the UK.

William Collins is a senior dealer at Currencies4less, a foreign-exchange company based in London

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