Chinese yuan. Growth/decline dynamics
The yuan (renminbi) is the official currency of the Republic of China. Let’s take a closer look.
Prior to the establishment of the People’s Bank of China in 1948, the yuan was issued as silver coins in 1835. China did not have a single currency, and were used as payments:
- Liang – he was equal to ten mao;
- In the case of large payments, gold bars were used;
- Qiani and Keshe – spread in the countryside;
- The country had a large amount of foreign currency;
- 1938 – 1945, military yen used.
In trading activities, the currency enjoys advantages, since, according to the United States, the Chinese are undervaluing the national exchange rate. Direct settlement with the Chinese in yuan is more profitable for retail chains than in the dollar peg. Also, the Chinese economy is quite interesting from the side of investment. In just a couple of decades, the country came second after the United States, overtaking Japan in gross domestic product.
There is an opinion that the Chinese currency is greatly undervalued. To be more precise, approximately twice. The official and real exchange rates differ significantly, the discrepancy reaches ten trillion dollars.
Dynamics of the last decade
2010, the yuan began to rise in price rapidly, consider against the dollar. 2013 was a record high, judging since 1994. The price rose to 6.07 yuan per dollar. In 2015, until about June, the price tag ranged from 6.101 – 6.16 yuan.
In the eighth month of 2015, there was a stock market crisis and a decline in supplies to the United States. The Chinese Bank allowed the largest currency depreciation since 1994, from 6.11 – 6.22 RMB. The next day, the price dropped again to 6.329 per dollar. Within a couple of days to 6.38 yuan. Naturally, such a decline in the exchange rate led to a fall in the currencies of countries with a rapidly developing economy at that time.
2016, the renminbi exchange rate reached 6.94 units, and in 2017 – 6.87 yuan, already in the eleventh month of 2018 – the rate was 6.96 against the dollar.
In the eighth month of 2019, the yuan began to depreciate. On the sixth, 6.9682 against the dollar was noted, immediately the next day – up to 6.9995 yuan, which became the lowest currency pair since the fifth month of 2008. This happened due to new duties from the United States on Chinese goods.
According to experts, the yuan exchange rate will only grow and will reach a high point in 2021. Over the past ten years, the yuan has doubled against the ruble. According to the majority of experts, in the future, RMB deserves high confidence, both for investment and for the entire world community as a whole. It is due to the fact that this economy has a considerable growth potential, and the currency can take the leading status and be used for settlements in the markets deservedly, next to dollars and euros.
The main reasons for the immutability of RMB are:
- The volume of export of goods manufactured in China;
- The influence of the Bank on the national currency, if necessary, artificial regulation;
- The minimum economic level depends on other states;
- China buys oil in colossal volumes, which allows it to reduce its price;
- It is worth noting the awkward factors for the Chinese currency;
- Significant debt to the Celestial Empire;
- Unpredictable reduction in financial reserves and financial drain from the country.
The value of the yuan is subject to changes from the price of oil, in addition, it is not always favorable.