In January 2024, the exchange rate of yuan to U.S. dollar was 7.1. In the past decades, the yuan had undergone a slow liberalization being more and more exposed to the international money market.
FOREX history of the Renminbi
After the Communist Party took control over China it introduced a unified currency which has since then undergone many changes. During the planned economy, the yuan had a fixed exchange rate. At the time, the currency’s exchange rate was deliberately set high to support the industrial development which relied on imports. After the country committed to opening its economy, the Renminbi was gradually exposed to the supply and demand of the global FOREX markets. Until 2005, the yuan remained pegged to the U.S. dollar.
Currency manipulator, or not?
As China manifested its role in the global economy, the country was repeatedly accused of manipulating the value of its currency. Especially, voices from the United States claimed that Beijing would intentionally keep the value of the yuan low. A cheap Renminbi would make products from China more attractive for foreign buyers which in turn would support the country’s export-driven economy. However, currency manipulation is difficult to make out and even harder to prove which is why no significant actions have been taken.
