The Status Of The China RMB

Issued by the People s Bank of China, the Chinese renminbi is one of the most unique currencies in the world at the moment. This is largely because of the restrictions and history that have characterised it since its introduction in 1948. Its status is certainly interesting because of the fact that it operates in a somewhat unique way and thus its status has always come into question. As a result, it is a currency that is worthy of further investigation in terms of forex information before any investment is made. The China RMB was initially set at unrealistic level when introduced to the foreign currency trading floor. That caused problems domestically and prevented legitimate and legal currency trading in any way, shape or form. However, owing to the growing Chinese economy and tourism industry, it was necessary for an overhaul of the renminbi to take place. There are still problems with the Chinese RMB, which has a knock on effect on fx currency trading. It is not fully convertible as yet and also has to operate within bounds set by the Chinese central government. Thus it may not be compatible for foreign currency trading if an individual trader happens to be a beginner in the field. The China RMB was initially pegged to the US dollar for trading, but this was altered in 2005, when the RMB was also revalued. It was set at 8.11 against the dollar and pegged against several currencies, including the Japanese yen, South Korean won, Australian dollar, Canadian dollar, British pound and Thai baht. It was allowed to float, but again was set in strict boundaries by the Chinese government. However, it was valued at a massive 9.7% up in August 2007, which is its highest rate since the peg was lifted. In terms of fx currency trading, this actually had the potential to reap rewards for those individuals that had invested. Its status at the moment actually owes much to the fact that Chinese trade is doing better than US trade. The Chinese trade surplus stood at 33% in August and actually overtook the US in terms of exports to Europe. However, the inflation rates in China have mirrored those around the world and contributed to the global economy accordingly. It stood at 6.5%, which is by far the highest since the turn of the millennium. This has led to speculation amongst forex information experts that it could float freely in the market as early as 2008. Whether that will actually materialize, only time will tell, but in the meantime, the RMB is certainly making waves in the world of forex. Whilst its status is uncertain, it will continue to do so! A freelance writer who publishes articles which are of interest to readers. For additional information on Forex Trading, please visit lyonsforex.com