China‘s yuan currency keep getting bigger

Jul 27, 2015, 11:42 am

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Likely to become top 4 major international payment currencies soon

The Chinese yuan is skyrocketing in value. An employee of a bank in Beijing is counting money./ Source from search engine Baidu. 

By Hong Soon-do, Beijing correspondent, AsiaToday - China's yuan (renminbi or RMB), which was undervalued during the 2000s, has become one of the top payment currencies in the world. Perhaps, it's only a matter of time for China's currency to dethrone the U.S. dollar.

Source well-versed in Chinese economic affairs said on July 26 that this prospect comes from the global status of the Chinese currency. Yuan is warmly received everywhere now unlike the past. Guwe, a president of a travel agency in Beijing, said, "Fifteen years ago, the Chinese yuan was not accepted in many countries in the world except some countries in Southeast Asia. But now, it is commonly used in Africa. Its international status is not much different from the dollar's."

We can tell the changed status of the Chinese currency with the RMB International Index (RII), which shows the international influence of the currency. The index for the second quarter this year rose to 2.9 percent - just one percentage point lower than that of the yen with 3.82 percent. We can see that the index rose more than 120 times from 0.09 percent in the end of 2009. Looking at the index, the prospect claiming that the Chinese yuan will become the world's fourth international currency in two years along with dollar, euro, and pound may become a reality.

It goes the same with yuan's exchange rate. Until the end of last year, the Chinese exchange rate against the dollar was held at 8.2 to one. Due to its bad image, it was even much lower than the official rate in the black market being 10 to one. However, it's completely different now. It has reached up to 6 to one, and may even reach to 5 to one. Its black market is entirely gone.

The global status of the Chinese yuan is likely to rise further in the future. Some claim that the yuan may battle against the US dollar to become the main reserve currency, beating out the euro and pound. Considering China's current economy and status in the future, it's not a ridiculous prospect at all. We can say that the era of the yuan is coming to town. 

#China #yuan #currency #renminbi 
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