Renminbi

The renminbi (Ab.: RMB; simplified Chinese: 人民币; traditional Chinese: 人民幣; pinyin: rénmínbì; literally: 'people's currency'; sign: 元/¥; code: CNY) is the official currency of the People's Republic of China. The Yuan (Chinese: 元; pinyin: yuán) is the basic unit of the renminbi, but is also used to refer to the Chinese currency generally, especially in international contexts where 'Chinese yuan' is widely used to refer to the renminbi. The distinction between renminbi and yuan is that renminbi is the name of the currency and yuan refers to its primary unit. One yuan is subdivided into 10 jiao (Chinese: 角; pinyin: jiǎo), and a jiao in turn is subdivided into 10 fen (Chinese: 分; pinyin: fēn). The renminbi is issued by the People's Bank of China, the monetary authority of China. The renminbi is sometimes referred to as the redback in the US financial press. Until 2005, the value of the renminbi was pegged to the US dollar. As China pursued its transition from central planning to a market economy and increased its participation in foreign trade, the renminbi was devalued to increase the competitiveness of Chinese industry. It has previously been claimed that the renminbi's official exchange rate was undervalued by as much as 37.5% against its purchasing power parity. However more recently, appreciation actions by the Chinese government, as well as quantitative easing measures taken by the American Federal Reserve and other major central banks, have caused the renminbi to be within as little as 8% of its equilibrium value by the second half of 2012. Since 2006, the renminbi exchange rate has been allowed to float in a narrow margin around a fixed base rate determined with reference to a basket of world currencies. The Chinese government has announced that it will gradually increase the flexibility of the exchange rate. As a result of the rapid internationalization of the renminbi, it became the world's 8th most traded currency in 2013, and 5th by 2015. On 1 October 2016, the RMB became the first emerging market currency to be included in the IMF's special drawing rights basket, the basket of currencies used by the IMF (reserve currency). The ISO code for renminbi (which may also be used for the yuan) is CNY (an abbreviation for 'Chinese yuan'), or also CNH when traded in off-shore markets such as Hong Kong. The currency is often abbreviated RMB, or indicated by the yuan sign ¥. The latter may be written CN¥ to distinguish it from other currencies with the same symbol (such as the Japanese yen). In Chinese texts the currency may also be indicated with the Chinese character for the yuan, 圆 (or 元 informally). The renminbi is legal tender in mainland China, but not in Hong Kong or Macau. However, Renminbi is widely accepted in Hong Kong and Macau and are easily exchanged in the two territories, with banks in Hong Kong allowing people to maintain accounts in RMB and withdraw RMB banknotes from ATM terminals. In 1889, the yuan was equated at par with the Mexican peso, a silver coin deriving from the Spanish dollar which circulated widely in southeast Asia since the 17th century due to Spanish presence in the Philippines and Guam. It was subdivided into 1000 dollars or wen (Chinese: 文; pinyin: wén), 100 cents or fen (Chinese: 分; pinyin: fēn), and 10 jiao (Chinese: 角; pinyin: jiǎo, cf. dime). It replaced copper cash and various silver ingots called sycees. The sycees were denominated in tael. The yuan was valued at 0.72 tael, (or 7 mace and 2 candareens). Banknotes were issued in yuan denominations from the 1890s by several local and private banks, along with the Imperial Bank of China and the 'Hu Pu Bank' (later the 'Ta-Ch'ing Government Bank'), established by the Imperial government. During the Imperial period, banknotes were issued in denominations of 1, 2 and 5 jiao, 1, 2, 5, 10, 50 and 100 yuan, although notes below 1 yuan were uncommon. The earliest issues were silver coins produced at the Guangdong mint, known in the West at the time as Canton, and transliterated as Kwangtung, in denominations of 5 cents, 1, 2 and 5 jiao and 1 yuan. Other regional mints were opened in the 1890s producing similar silver coins along with copper coins in denominations of 1, 2, 5, 10 and 20 cash. Other regional mints were opened in the 1890s. The central government began issuing its own coins in the yuan currency system in 1903. Banknotes were issued in yuan denominations from the 1890s by several local and private banks, along with banks established by the Imperial government.