Chinese Yuan Renminbi (CNY)

What Is the Chinese Yuan Renminbi (CNY)?

The term Chinese yuan renminbi (CNY) alludes to the currency utilized in the People's Republic of China. Although it may appear to be somewhat confounding because the names are frequently portrayed together, they're actually two separate terms. A yuan acts as China's unit of account for its financial system and economy, which addresses a single unit of money. The term renminbi, then again, is the official name of the currency itself.

Understanding the Chinese Yuan Renminbi (CNY)

The Chinese yuan renminbi is the official currency of mainland China. As indicated above, the term yuan alludes to a single unit of the currency while the term renminbi alludes to the actual name of the currency itself. The yuan is abbreviated as CNY while the renminbi is abbreviated as RMB. The latter was acquainted with the country by the Communist People's Republic of China at the hour of its establishing in 1949.

China's national currency is issued by its central bank, the [People's Bank of China](/people groups bank-china-pboc) (PBOC). The bank is headquartered in Beijing, the nation's capital. Along with printing the currency, the bank is also responsible for monetary and fiscal policy as well as financial regulation in China. The PBOC management team comprises of a lead representative, six delegate governors, and a chief investigator.

The symbol for the currency is \u00a5. A single yuan is partitioned into 10 jiao. One jiao is additionally partitioned into 10 fen. Banknotes in circulation come in one, two, five, 10, 20, 50, and 100 yuan denominations, as well as one, two, and five jiao notes. The central bank also mints coins in one, two, and five fen. Coins are also issued in one and five jiao, along with one yuan denominations.

Several series of the renminbi were issued since the 1950s, each of which has its own banknotes and coins. The fifth series is currently legal tender, leading the prior ones to be phased out. The CNY is definitely not a free-floating currency system. Instead, it is managed through a floating exchange rate, and that means it is allowed to float in a narrow margin around a fixed base rate determined with reference to a basket of world currencies. The CNY was pegged straightforwardly to the U.S. dollar until 2005.

You can tap into the Chinese market by investing in American depositary receipts or by purchasing China A-shares.

Special Considerations

As referenced above, the terms yuan and renminbi are regularly utilized interchangeably or together in certain parts of the world, so it's no surprise that their utilization frequently befuddles investors. The term yuan renminbi, however, is a ton like the terms pound sterling and pound, which are utilized to portray the currency of the United Kingdom.

The pound sterling is the name of the British currency itself while pounds are a denomination of the pound sterling. You use pounds to purchase goods and services, not pounds sterling or sterling. Following this example, it's memorable's important that you can allude to the currency in general as the renminbi. However, references to monetary value and prices utilize the term yuan. For instance, the suggested retail price for a BMW 320Li M was \u00a5339,800 as of March 2019.

Devaluation

The CNY went through a steady stream of appreciation against the greenback, leading the country to devalue its currency several times in 2015. Chinese leaders said this was part of the country's market reform efforts. This, thus, opened up a trade war with the U.S. calling China a currency manipulator, President Donald Trump forced tariffs on Chinese goods starting in 2018. China answered with its own set of tariffs on American products.

Not in the least did devaluing the CNY make Chinese goods more affordable and attractive in international markets, yet there was also another advantage for China. It became the primary emerging market currency remembered for the International Monetary Fund's (Imf's) special drawing rights (SDR) basket — a reserve currency utilized by the IMF. The IMF added the CNY to the basket in Oct. 2016.

Features

• Yuans are partitioned into 10 jiao and one jiao is separated into 10 fen.
• The Chinese yuan renminbi is the currency utilized in the People's Republic of China.
• Yuan is the actual unit of currency while renminbi is the name of the currency itself.
• Banknotes are imprinted in one, two, five, 10, 20, 50, and 100 yuan denominations, as well as one, two, and five jiao denominations.