The anticipated depreciation may offset the motivation of many central bankers to increase RMB holdings in their foreign exchange reserves. Whether the demand for RMB holdings in the world will increase or decrease is unclear at present. Essentially, any country in the world can choose to have two out of the three following policy objectives: free capital movement, a fixed exchange rate and monetary autonomy.
They cannot have all three. Most OECD countries choose to have monetary autonomy and free capital mobility, and are under floating rates regimes. China would like to have monetary autonomy after liberalising its capital flows. The central bank of China currently lacks independence. Any expression of the price is always in a dollar, pound, or yuan—not Federal Reserve notes, sterling, or renminbi.
In the summer of , the IMF reported that the Chinese yuan was in line with fundamentals, only to then witness the yuan reach a month low in response to an escalating tariff war with the United States.
For years, the Chinese yuan renminbi CNY had never been close to being considered an international currency because of the Chinese government's rigid controls. However, this then began to change. According to a report by Standard Chartered Bank, usage of RMB for international trade expanded 21 fold since , and it expected that almost half of China's goods trade would be invoiced in RMB by In October , the renminbi was added to the list of the top-five most-used currencies, in addition to the U.
However, data reported by Swift, the global inter-bank system, revealed that only 1. Michael Moon of Swift stated, "The renminbi has had a difficult year in and struggled to realize its potential for growth. The growth of Chinese currency is often a roller coaster. China has increased its attempts to back its currency, including promoting free usage of the renminbi. Whether you know it as a yuan or renminbi, what matters is that the currency from China remains a part of the currency conversation on the global stage.
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I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Part Of. Global Players. Economy Economics. Table of Contents Expand. Yuan vs. Renminbi: An Overview. Money As a Medium of Exchange. The dollar of choice among Chinese businessmen was for a long time the Spanish Colonial Mexican dollar. Later it was the so-called Eagle Dollar produced by independent Mexico.
In the second half of the 19th Century major trading nations starting producing their own "trade dollars". The UK produced a trade dollar, and so did the US, as discerning Chinese traders demanded higher-quality silver than the metal used in regular US dollars.
China's first domestically produced machine-struck dollar coin, or yuan, was minted in Guangdong province in The Chinese phrase for the US dollar is "mei yuan", the American yuan. The Japanese and Korean names for their currencies, the yen and the won respectively, are derived from the same Chinese yuan character. The Chinese name for the Japanese yen is the "ri yuan".
Nobel-prize-winning economist Paul Krugman, writing in the New York Times in October , noted that no-one seemed to mind if you talked about the pound's value, but talking about the yuan's value would sometimes draw disapproval. As it happens, Chinese people rarely talk about renminbi or yuan. The word they use is "kuai", which literally means "piece", and is the word used historically for coins made of silver or copper.
Also common is "10 kuai qian", literally "10 pieces of money". The same thing happens again when you break down your yuan into smaller units, the jiao and the fen one yuan is equal to 10 jiao and one jiao is equal to 10 fen.
There is nothing wrong with the word jiao, it is just that most people use the word mao instead.
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