Trading Chinese Yuan (Renminbi)

The Chinese economy has been rapidly growing for decades, now sitting as the second largest in the world, trailing only the USA. This growth in economic prominence and the resulting importance of its currency, the Chinese yuan (renminbi), is exciting for many forex traders. Today’s geopolitical climate, particularly between China and the US, provides further volatility and opportunity for investment and speculation in the forex markets. This volatility is, however, limited to some extent by the Chinese government, which intervenes with the natural market of the renminbi’s exchange rates. Find out more about forex trading economics and how to start investing in the Chinese yuan today.

Chinese Yuan Trading Brokers

  1. XTB

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    XTB provides access to 70+ currency pairs with low spreads averaging around 1 pip on majors. The xStation platform offers an intuitive environment for forex traders with an excellent charting package encompassing 30+ indicators, plus a range of order types, catering to various strategies and risk management techniques.

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    Eightcap offers 50+ currency pairs in line with the industry average but trailing category leaders like CMC Markets with its 300+ currency pairs. However, Eightcap stands out with institutional-level spreads from 0.0 pips on major pairs like the EUR/USD, alongside low $3.50/side commissions. The broker also offers rich forex data to inform trading decisions, including key fundamentals, bullish/bearish indicators and a calendar that tracks key events in the foreign exchange market.

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    FXCC's key selling point is its forex trading conditions. ECN spreads come in as low as 0.0 pips during peak trading hours, while it supports a wider range of currency pairs than the majority of rivals with over 70 forex assets. Additionally, you have access to MT4, which was built specifically for forex trading and excels for its charting tools.

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    Vantage offers 55+ currency pairs - above the industry average, so experienced traders can explore plenty of opportunities. Vantage's deep liquidity pool provides forex spreads from 0.0 pips in the ECN account, lower than many alternatives. There are also no commissions, deposit fees or hidden charges.

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    IC Markets maintains its commitment to providing exceptionally tight 0.0-pip forex spreads on major currency pairs such as EUR/USD. This makes it an excellent option if you are seeking superior execution, with an average of 35 milliseconds. Additionally, if you are a high-volume trader, you can benefit from rebates of up to $2.50 per forex lot.

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    AvaTrade offers 50+ currency pairs with competitive spreads from 0.9 pips and zero commissions. You can trade majors, minors and exotics around the clock on industry-leading platforms, including MT4 and MT5. Traders can also access beginner-friendly trading tools and comprehensive forex education.

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    FOREX.com continues to uphold its stature as a premier FX broker, offering over 80 currency pairs and boasting some of the most competitive fees in the industry. With EUR/USD spreads dipping as low as 0.0 and $5 commission per $100k, it stands out. Moreover, its SMART Signals help to identify price behaviors across numerous major currency markets.

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    Pepperstone offers ultra-competitive forex spreads averaging 0.12 pips on EUR/USD in the Razor account, accompanied by a diverse portfolio comprising 100+ currency pairs - an extensive selection surpassing most competitors. Additionally, Pepperstone distinguishes itself by offering three currency indices (USDX, EURX, JPYX), not commonly found among alternative platforms. Pepperstone has now won our annual 'Best Forex Broker' award twice.

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    IBKR presents an extensive range of over 100 major, minor, and exotic forex pairs, surpassing the offerings of nearly all leading alternatives, though not CMC Markets. Forex trading occurs over multiple platforms and boasts institutional-grade spreads starting from 0.1 pips and 20 complex order types, including brackets, scale, and one-cancels-all (OCA) orders.

  10. XM

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    XM offers ultra low spreads across a wide range of forex assets with no re-quotes or hidden charges. Over 50 currency pairs are available, which is above the market average and is in line with one of our top award-winners, AvaTrade.

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    PrimeXBT offers 50 forex pairs, which is above the industry average and covers a good range of majors, minors and exotics. Traders can enjoy trading via margin with zero commissions. Additionally, the broker’s copy trading service allows you to explore various currency trading strategies.

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    OANDA offers 68 currency pairs, which is above the industry average. You can speculate on majors, minors and exotics, with spreads from 0.8 pips on popular pairs. There are no commissions and leverage is available up to 1:200. Average execution speeds are fast based on tests, at 12 milliseconds.

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    IG offers an above-average suite of 80+ currency pairs on its proprietary web platform, mobile app or MetaTrader 4, with more advanced charts and forex analysis tools available on the ProRealTime software. Forex spreads are competitive based on tests, starting from 0.1 pips on majors like the EUR/USD.

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    FxPro offers 70+ currency pairs with ultra-fast execution speeds and tight spreads from 0.46 pips on EUR/USD. The range of forex assets outranks many rivals, including our award winner, AvaTrade. Various short-term forex strategies are permitted, including EA trading and hedging.

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    Plus500 provides forex trading through CFDs, featuring narrow spreads across an impressive selection of over 60 currency pairs. During testing, spreads came in as tight as 0.6 pips on the EUR/USD, which is notably lower than many alternatives.

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    Markets.com offers 43 major, minor and exotic currency pairs. The range is around the industry average, though spreads are fairly competitive, starting from 0.6 pips for EUR/USD. There’s also an excellent range of tools and education, including forex calculators and trading videos.

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    NinjaTraders supports the trading of popular currencies including the EUR/USD. The software also offers advanced features to streamline the trading experience, including complex order types like market if touched (MIT) and one cancels other (OCO).

  18. Axi

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    Axi continues to offer a strong selection of 70+ currency pairs - more than many top brokers including award-winner AvaTrade, with only 50+. There are no restrictions on trading strategies including algo trading and scalping, which will serve both short-term and long-term traders.

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    Trade 35 major, minor and exotic forex pairs through CFDs with floating spreads from 0.1 pips. Alternatively, binary options allow you to speculate on rising and falling prices with a fixed stake and payout.

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    An above-average selection of 55 currencies are available with reasonable spreads averaging 0.9 pips on EUR/USD during peak hours. Aspiring traders can continuously hone their forex strategies by switching between demo mode and their live account any time, with full access to the broker's 100+ technical indicators.

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    Focus Option offers 22 forex pairs tradeable via binary options, including a selection of majors and minors. FX pairs are also available to trade with margin on Focus Option's mobile app, which offers high leverage up to 1:50 and spreads from 1 pip.

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    DNA Markets continues to deliver an excellent environment for forex traders with 50+ currency pairs and low spreads from 0.0 pips on the EUR/USD during tests. The MetaTrader 4 platform, available on desktop, web and mobile, was also designed specifically for forex trading.

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    OspreyFX offers more than 50 major, minor and exotic currency pairs. Spreads start from just 0.1 pips on the EUR/USD and the broker provides a suite of forex trading education for beginners, including partnering with Forex Squad.

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    CloseOption offers binaries on 25+ forex pairs, including majors like EUR/USD and a few minors like AUD/JPY. Payouts vary by currency, with decent typical payouts of 75% for GBP/USD.

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    Trade 70+ major, minor and exotic forex pair CFDs with up to 1:1000 leverage, no commission fees and competitive spreads from 0.8 pips. FX trades can also be executed via the reliable and fast MetaTrader 5 software.

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    Errante traders can access 50+ forex pairs with leverage up to 1:500 (location dependant). The broker offers fast execution and tight spreads, especially to clients with VIP and Tailor-Made accounts.

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    Kwakol Markets offers a wider range of forex pairs than most competitors, with 90+ assets available. Users get fast execution speeds and competitive spreads through the ECN model. On the negative side, not all currency pairs are available on MT4.

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    Trade 70 major, minor and exotic forex pairs with ultra-low ECN spreads and fast execution via the MT4 or MT5 platforms. There are also zero SL/TP limits and automated forex trading is well catered for.

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    Ingot Brokers offers forex trading on a modest suite of 30+ currency pairs with raw spreads on the MT5 platform. There are also no restrictions on short-term trading strategies, including hedging, scalping and the use of Expert Advisors (EAs).

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    Trade a small selection of 25 major and minor pairs. Spreads from zero on the pro account, micro-lot trading, and very high leverage make up for the limited range of currencies. The MetaTrader software is also a well-regarded platform for forex trading.

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    Axofa offers a decent range of 50+ forex pairs with raw spreads from 0.0 pips. Very high leverage up to 1:1000 and commission-free forex trading is available. With that said, the broker is not particularly transparent when it comes to account conditions and fees.

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    Go long or short on over 50 currency pairs with spreads from 0.6 pips on EUR/USD. Traders can access market-leading forex tools in the MT4 platform, including customisable forex charts and algorithmic trading.

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    World Forex offers CFD and digital contract trading on 53 forex pairs, including EUR/USD and GBP/EUR. High leverage is available for CFDs, which can be accessed with competitive spreads on certain account types.

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    FinPros offers 80+ forex pairs, which is one of the more diverse offerings available. Traders benefit from ultra-low latency, MT5 support and very tight spreads and low commissions on the RAW+ account.

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    Trade 45+ major, minor and exotic pairs with deep liquidity and low latency. The ultra-tight spreads from 0.01 pips on raw accounts, competitive $7 or lower round-turn commissions and high leverage up to 1:500 will suit scalpers, who can trade without limits.

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    IQCent traders can access CFDs or binary options on 45+ forex pairs. CFD spreads start from 0.3 pips and binary options payouts are decent up to 95%. This is competitive compared to Pocket Option, for example, offering forex payouts up to only 81%.

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    Trade 50+ forex pairs including popular majors and minors with very high leverage available up to 1:1000. Gold, silver, palladium and platinum pairs with USD are also available.

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    Trade 25+ major and minor currency pairs with access to over 30 technical indicators in the broker's proprietary terminal. You can also follow and replicate other forex trades using the integrated copy trader.

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    Scope Markets offers 40+ major, minor and exotic currency pairs. Although the range is average, experienced traders can access very high leverage up to 1:2000. Additionally, the broker’s proprietary terminal delivers advanced analysis tools, including a live forex heatmap.

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    Trade 50+ forex pairs, including popular major, minor and exotic pairs. This is a decent selection, but traders will have a choice between the attractive MT4, MT5 or IRESS platforms and regulatory cover from ASIC. The VPS will also suit automated forex trading strategis.

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    Anzo Capital offers 45+ forex pairs including majors, minors and exotics with fast execution and spreads starting from zero. High leverage up to 1:1000 is available with a margin call at 80% and a stop out level at 50%.

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    I think the range of 60+ major, minor and exotic currency pairs is fairly competitive, especially with spreads from 0 pips in the Pro account. Experienced traders can also access high leverage up to 1:500 in the popular MT4 platform.

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    Rock Global clients can access 50+ currency pairs via CFDs with leverage up to 1:500, world class liquidity and fast execution on the MT4 or TWS platforms. The tight spreads from 0.9 with no commission are a particularly attractive feature.

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    VT Markets offers an average selection of 40+ forex pairs with up to 1:500 leverage. Forex spreads in the ECN account are highly competitive, starting from 0.0 pips, although the 1.2-pip minimum quotes in the Standard account are a little higher than the likes of Pepperstone or IC Markets.

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    Binary and OTC options can be purchased on 40+ currency pairs, with 55+ currency pairs available if you deposit $1000. Typical payouts are reasonable at 81% and the $1 minimum trade makes the broker accessible to new forex traders. There is also access to the MT4 and MT5 platforms for experienced forex traders.

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    Exinity offers 150+ forex pairs to trade on a very competitive ECN pricing model, with spreads from zero and low commissions of $4 per round turn. Traders can access the powerful MT4 and MT5 platforms and trade with no restrictions on popular trading strategies.

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    ForexChief supports spot foreign exchange trading on all account types for 40+ major, minor and exotic currency pairs. Trading takes place on the leading MT4 and MT5 platforms, which offer dozens of in-built technical tools for short-term forex strategies.

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    PU Prime clients can trade 40+ forex pairs via the MT4 and MT5 platforms with dynamic leverage up to 1:500. Spreads start from near zero on Prime accounts, which also charge a $7 commission per lot, and a zero-commission Standard account with wider spreads is also available.

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    With 100+ currency pairs including all majors plus many minors and exotics tradeable on the MT4 platform with 1:2000 leverage, SuperForex lives up to its name as a great choice for forex traders. The ForexCopy system is also useful for newer traders.

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    AdroFx's strongest offering is its 60+ currency pairs, which can be traded with very high leverage up to 1:500. The broker also offers competitive forex spreads starting from 0.4 pips and charges no commission. Additionally, traders have access to MetaTrader 4, which was built for forex trading and offers excellent support for technical analysis and algo trading.

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    Start trading on dozens of currencies at RoboMarkets with powerful analysis tools and pattern recognition technology. 35+ currency pairs are available with tight spreads from 0 pips and rapid market execution. You can also utilise the broker's forex news alerts and economic calendar.

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    Trade 7 major, 21 minor and 29 exotic forex pairs with high leverage and a choice between STP or ECN accounts. Support is available around the clock and the TradeLocker forex software is provided.

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    M4Markets offers 45+ currencies with zero pip spreads. The low latency and 30-millisecond execution speeds makes the broker a decent choice for forex traders. Additionally, there are no restrictions on trading strategies, including scalping.

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    MultiBank FX offers trading on 50+ major, minor and exotic currency pairs. Spreads are tighter than many competitors and the broker offers higher leverage than most alternatives. Automated trading strategies are also permitted.

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    I’m happy with Tradeview’s strong range of 60+ currency pairs spanning majors, minors and exotics with competitive spreads from 0 pips in the $1000 ILC account. Traders can choose from several platforms, but I was particularly impressed with the feature-rich Currenex platform which is designed specifically for currency trading.

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    Global Prime traders can access 48 forex pairs including majors, minors and exotics with tight spreads from 0.9 with no commission or from 0 with a $7 round turn. Forex is traded via the leading MT4 platform, micro lots are available and latency is low via a New York-based server.

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    Trade Nation offers over 30 of the most popular forex pairs with variable spreads. Traders can access a slick proprietary platform or MetaTrader 4, with real-time forex market updates and insights via 'Smart News'.

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    As well as a competitive selection of 55+ forex pairs, traders can access high leverage up to 1:300. You can also enjoy advanced analysis from Trading Central with easy integration into MetaTrader 4.

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    Traders can access a decent range of 60+ major, minor and exotic forex pairs through standard and ECN accounts with tight spreads from 0.5 and 0.0, respectively. Execution speeds are also faster than most competitors at 50ms, which will appeal to active forex traders.

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    4xCube offers 60+ currency pairs with competitive trading conditions. We like that all trading strategies are permitted including scalping and hedging.

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    ActivTrades is a great broker for active forex traders with industry-low spreads from 0.5 pips and zero commissions. The forex broker also offers impressive execution quality and speeds, alongside award-winning customer service.

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    BlackBull offers 64 forex pairs with very competitive pricing through its ECN accounts, with the standard commission-free spread starting from 0.8 and spreads with commission starting from zero. The broker supports diverse trading platforms including MT4 and MT5, and provides leverage up to 1:500.

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    RoboForex offers trading on 30+ currency pairs, trailing category leaders like Pepperstone with its 90+ forex assets. That said, the Prime and ECN accounts feature competitive average spreads of 0.1 pips on the EUR/USD. Additionally, with a minimum investment of $100, traders can utilize the CopyFX system to replicate the strategies of seasoned currency traders.

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    Swissquote offers trading on a huge range of forex assets, covering 80+ currency pairs. Spreads start from 1.3 pips with the Premium account and there are zero commissions. Micro, mini and standard lot sizes are available plus options contracts on major currencies.

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    SimpleFX provides a comprehensive selection of around 60 currency pairs, from majors like GBP/USD to exotics like CHF/PLN. Forex trading fees are competitive, averaging 0.9 pips on EUR/USD during testing, while MetaTrader 4, available on desktop, web and mobile, was built specifically for trading currencies online.

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    You can go long or short on over 50 forex pairs from majors to exotics, with competitive spreads as low as 0.1 pips. The broker offers the leading charting software, MetaTrader 4, which delivers a host of advanced features, including 9 timeframes and over 30 indicators.

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    FXDD continues to offer a leading selection of 90+ currency pairs with ECN pricing. Spreads are decent, coming in at 0.4 pips for EUR/USD during testing. That said, these quotes aren’t as narrow as top competitors like Pepperstone.

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    Trade on 45+ majors, minors, crosses and exotics, with competitive pricing, ultra-fast execution and no requotes. Newer traders can access zero-commission trading. Experienced forex traders can operate with no trading restrictions and benefit from an ECN account and a VPS service.

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    FXTrading clients can access 70+ forex pairs with high leverage up to 1:500, fast execution averaging 80ms, excellent liquidity and spreads from zero. A good selection of minors and exotics are available as well as all the majors. New users can start trading forex in 4 easy steps.

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    With over 190 forex spot pairs, EZ Invest outperforms many rivals in terms of access to the currency markets. Users can also choose between desktop software, a webtrader plus a solid mobile app. On the negative side, spreads aren't the tightest on entry accounts.

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    Trade 50+ forex pairs via the MetaTrader 4 and MetaTrader 5 platforms with leverage up to 1:500, immediate execution, deep liquidity and tight spreads.

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    Fortrade offers 60+ currency pairs including a good selection of majors, minors and exotics. Trading takes place via MT4 or Fortrade's proprietary, low-latency terminal, and spreads on the USD/GBP pair average a reasonable 2 pips.

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    FP Markets stands out as an excellent option for forex traders, boasting a selection of over 70 currency pairs covering a wide range of currencies, especially since expanding its choice of exotics. With average spreads of just 0.1 on the EUR/USD in its Raw account, the broker provides competitive pricing for traders.

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    IronFX continues to offer a strong selection of 80 currency pairs. You can trade through the market-leading MT4 platform with a range of forex market research tools. That said, commission charges in the zero-spread accounts are high, starting from $13.50 per lot.

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    Trade 80+ major, minor and exotic forex pairs. This is a very competitive range of currency pairs with 50+ exotics to choose from, and traders will benefit from fast execution and support from extra features including a pip calculator. The MetaTrader 4 software was also designed for online forex trading.

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    Libertex offers CFD trading on 50+ forex pairs, offering long and short opportunities. Its strength comes in its tight spreads – we were offered 0.2 pips for EUR/USD.

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    NordFX offers a modest range of 33 major and minor forex pairs. Disappointingly, there are no exotic pairs, though traders do benefit from tight spreads from 0.0 pips and low commissions from 0.0035% per side.

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    HYCM offers 40+ forex pairs, with most available to trade on either the MT4 or MT5 platform. The maximum leverage on offer is 1:30 in accordance with regulations, and tight spreads start from 0.2 on the Raw account and from 1.2 on the commission-free Classic account.

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    FXOpen clients can trade 50+ forex pairs (28 on micro accounts) with leverage up to 1:30. Fees are competitive with spreads starting from zero with a small commission on ECN accounts, and slightly wider spreads and no commission on STP accounts.

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    Trade 45 major, minor and exotic forex pairs. This is an average range, but the broker offers attractive and very competitive tight floating spreads from 0.3. Useful features including a news feed set the broker apart from many rivals and can help plan forex strategies.

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    Hantec Markets offers a limited range of 30+ forex pairs – less than most top brands, including Pepperstone with 100+. That said, market execution is rapid based on tests, and spreads are competitive starting at just 0.2 pips. This, combined with access to the popular MT4 platform with 30+ technical indicators, ensures a relatively complete trading experience for short-term currency traders.

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    With 60+ currency pairs available, Dukascopy offers enough majors, minors and exotics to keep most forex traders happy. The broker also offers high leverage up to 1:100 – a good amount to see from a reputable and regulated broker. Currency traders have access to excellent software, including MT4 and JForex.

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    Speculate on popular currency pairs with flexible leverage up to 1:500 and zero-pip spreads in the GO Plus account. Commission-free trading is available with micro, mini and standard forex contract sizes.

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    Tier 1 liquidity on an impressive range of 189 currency pairs and spot metals, plus 130 forwards, from 0.4 pips.

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    Trade on 60+ forex pairs with no commission and competitively tight spreads from 0.6 on major pairs such as EUR/USD. This is a good selection of forex pairs and excellent pricing for commission-free trading, well below the industry average.

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    Trade a wide selection of 80+ currency pairs with spreads from 0.5 pips and industry-favorite platforms. City Index has 40+ years experience in forex trading with liquidity from tier-one banks.

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    ThinkMarkets offers 46 currency pairs, which is around the industry average. Forex traders can benefit from tight 0.0-pip spreads for EUR/USD during peak market hours. Additionally, the ThinkTrader proprietary platform offers an impressive 125+ technical indicators - ideal for complex forex strategies.

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    CMC presents an extensive array of 300+ forex pairs characterized by tight spreads and rapid executions, surpassing the offerings of many competitors in terms of currency diversity. Forex indices also present a fairly unique and holistic way to speculate on the value of key currencies like the USD, EUR and GBP.

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    FXTM offers a strong range of 60+ currency pairs - more than many competitors including AvaTrade. There’s also 6 currency indices for traders looking to diversify their forex portfolios. The brand’s ECN account offers competitively low spreads from 0 pips, with equally low commissions up to $2 per lot.

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    Trade FX pairs with tight spreads & leverage.

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    easyMarkets continues to offer 60+ forex pairs including majors, minors and a selection of exotics, with fixed spreads from 1.8 pips or variable spreads from 0.8 pips. FX traders can access advanced trading software in MetaTrader, as well as very high leverage up to 1:2000.

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    Fusion Markets offers an excellent selection of 90+ currency pairs, providing a range of short-term trading opportunities. It continues to excel for its ultra-tight spreads from 0.0 pips and exceptionally low commissions of $2.25 per side. You also get access to leading forex software in MetaTrader 4.

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    Trade 24 forex pairs via binary options. Such a small range of currency pairs is not that unusual among binary options brokers, and BinaryCent's high payouts up to 95% compensate for the lack of range.

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    Trade 49 major, minor and exotic currency pairs with fixed spreads or ECN pricing with no dealing desk intervention and a low starting deposit. You can analyze the currency markets using the broker's in-house trading platform.

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    FXCM offers an average range of 40+ currency pairs, although there are no commissions and spreads are competitive from 0.78 pips for EUR/USD. The broker also offers 3 forex baskets covering USD, Yen and emerging markets benchmarks.

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    InstaForex's range of 100+ currency pairs is among the largest we have seen. ECN spreads are also available from 0.0 pips with zero commissions. Minimum deposits start from $1 making the broker accessible for beginners. You can also access market-leading forex analysis and insights.

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    Trade 200 CFD forex pairs with DMA pricing and tight spreads, ultra low latency and high leverage up to 1:1000. The range of forex pairs available and pricing model are among the most attractive in the African market.

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    Capital.com offer a long list of forex CFD pairs for trading. All have competitive spreads. The firm also ensures negative balance protection

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    Trade over 180 major, minor, and exotic forex pairs on the Trading 212 platform, featuring floating spreads and leverage up to 1:30. It’s important to note, though, that the forex broker has a history of adjusting margin requirements without providing adequate notice. As a result, CMC Markets is a better pick for forex traders with more currency pairs and a cleaner record.

The Renminbi & Yuan

While the official currency is called renminbi, and has the symbol RMB, the unit is a yuan, pronunciation ‘yoo-an’, and this is the more common name. The Chinese yuan has a similar symbol or logo to the Japanese yen sign, but with two lines across the Y.

Things get more complicated when trading the Chinese yuan in forex as there are two distinct markets. The yuan is traded both onshore and offshore, due to restrictive capital controls from the Chinese government that prevent the currency leaving China. The onshore market, traded in mainland China, is given the forex symbol CNY (the CH denoting China and the Y denoting yuan).

The offshore market was introduced in Hong Kong, with the abbreviation CNH (H for Hong Kong). The yuan market has since spread, now including many offshore markets such as the London and Taiwan denominations with the codes CNL and CNT, respectively.

The onshore market is heavily controlled by the Chinese government and mostly driven by corporate bodies who buy RMB against foreign currencies for business purposes and settlements between banks. This provides some trading possibility for those within the borders of China.

Any trading done on the renminbi beyond the Chinese borders is done with CNH, or other offshore Chinese yuan markets. The CNH markets are much less controlled by the government, instead being driven primarily by the supply and demand of the currency in the forex markets. This makes the currency ripe for speculation, hedging and investment. It is important to note, however, that the People’s Bank of China (PBOC) still manages the offshore market somewhat.

The differences in driving forces for the two markets mean that the CNY and CNH often have different prices, however, there tends to be strong correlation in curves and trends. Generally, the CNH is more volatile in its reactions to certain events as the government intervenes in the CNY market to match economic policies. Disparities between the two can be indicative of capital outflows, with lower levels of outflow correlating to a stronger relative level of the CNH.

Trading the USD/CNH Vs USD/CNY

Trading the USD/CNH Vs USD/CNY

The government has a lot of control over the Chinese yuan price levels through PBOC and state banks. Policy makers fix the Chinese yuan at a target value each day based on economic policies, the previous day’s closing rates and the valuation of a basket of other currencies. Once this target, or midpoint value, is set each morning, the CNY trades within 1 percent either side of this midpoint. If the price goes beyond this band, the PBOC will buy or sell some currency as required.

An additional control, the countercyclical factor, was introduced in 2017. This helps to mitigate large swings in either direction, resulting in a more stable currency that is more attractive to foreigners.

Currency Regimes

The Chinese currency market has had many regimes over the past few decades, each with varying levels of intervention from the government. From a dual-track system before 1994, a quasi-fixed rate was established for 11 years, settling at 8.28 USD/CNY. After 2005, the flexibility of the currency was increased to a manage-floating exchange rate system that pegged the yuan against a basket of currencies, instead of just the US dollar.

The Chinese yuan was re-pegged following the 2008 crisis to a restricted range of 6.81 to 6.85 against the USD to protect international trade. After the crisis, in 2010, the liberalisation of the currency was resumed, and the Chinese yuan trading band grew from 0.5% to 2% over four years. In 2018, the CNY was re-set against a basket of currencies and the managed-floating regime is still used today. Below is a price chart showing the history of the Chinese yuan’s exchange rate against the US dollar since 1992.

USD/CNY history trading chart

USD/CNY history trading chart

The CNH is a much newer currency, with preparation for its release beginning in 2004, when Hong Kong began to introduce business in RMB. On 23 August 2010, the Chinese yuan (CNH) currency was launched and the first quote for USD/CNH was released. The picture below shows the CNH’s exchange rates up to 2018.

USD/CNH investing chart

USD/CNH investing chart

The Next Top World Reserve Currency?

The Chinese government has aims to internationalise their currency through development of offshore RMB markets, increased use in cross-border investment and expansion in foreign trade settlements (now the second largest currency after USD).

The Chinese government demonstrated their commitment to these aims through the establishment of the Contingent Reserve Arrangement and the Asian Infrastructure Investment Bank (AIIB). In 2013, the government also made economic reforms that led to the International Monetary Fund (IMF) elevating the Chinese yuan to a global reserve currency. The reserve currencies joined by the Chinese yuan include the USD, EUR, GBP and JPY. The rankings of reserve currencies have historically followed those countries with the highest incomes. Therefore, many believe that China will eventually rise to the top of the reserve list, taking the title away from the US.

The reserve status of the RMB means that central banks outside of China hold significant quantities of the currency for foreign exchange. This allows more frequency and volume for international trade and transactions as well as economic benefits for China. The status also implies a level of stability of the currency, improving investor confidence.

The Trade War

In 2018, geopolitical events resulted in the US government imposing import tariffs up to $60 billion. This prompted a trade war between the two superpowers, with closer to $600 billion in tariffs having been implemented by the US government, and $185 billion by the Chinese government by the end of 2020.

The market most affected by these events is the USD/CNH, although the impacts will filter down through almost all global markets, from the euro-yuan market to company stocks and commodity prices. The trade war has primarily manifested itself through the volatility of the above forex pair, with CNH dropping to 6.235 in March 2018, lower than it had been since 2015, then shooting up to 7.195 in September 2019, the highest the yuan had ever been.

The two countries reached some level of agreement in January 2020 when China agreed to boost US imports by $200 billion and the US agreed to halve some of their tariffs. However, the trade war is ongoing, with tariffs still imposed and no sign of the Biden administration intending to resolve the issue.

USD vs CNY reserve currencyUSD vs CNY trade wars

In terms of the trade war’s impacts on the value of the Chinese yuan to the US dollar, there are several possibilities. One option is for China to offset the impacts of the US-imposed tariffs, as they only import from the US a third of what the US imports from China. This offset can be carried out through devaluation of the Chinese yuan such that the percentage influence on imports was reflected in a percentage drop of the Chinese yuan exchange rate.

Alternatively, the two countries could hit an impasse that lasts a long time, with no significant effects on either currency and the Chinese government maintaining the strength of the yuan so as not to incur further tariffs. If, however, a trade deal were to be finalised, the yuan may appreciate slightly. This is likely to be limited, though, as there will probably be clauses that remove the possibility for significant future depreciation.

Indicators & Impacts

The country’s government retains a strong hold over the valuation of the Chinese yuan coins and banknotes in the forex markets, keeping it permanently undervalued for international competitiveness. This contributes to a low trading volume in the forex markets, as speculation is more difficult and the PBOC can intervene, increasing risks of loss. While some experienced traders like this level of volatility and risk, there may be profit opportunity for others when control is released, as the currency may appreciate.

The health and performance of the Chinese economy has a major impact on the price of the currency. The GDP reports released by the Chinese National Bureau of Statistics are a good indicator of the economy’s growth and has good links to the fiscal and economic policies the government enacts. The reports are delayed by 45 days after the reference period and provide both year-on-year and quarter-on-quarter statistics.

Industrial production figures, also released by the Chinese National Bureau of Statistics, are another indicator of economic performance. These statistics give production levels in different sectors of the economy, adjusted for inflation.
China also releases purchasing managers indexes (PMIs), both on manufacturing and non-manufacturing sectors. These survey companies for business conditions and are demonstrative of expansion or contraction in the relevant sectors and economic areas.

Alternative Ways To Invest In CNH

Beyond speculating on forex pairs involving Chinese yuan, or other renminbi tickers, there are several options for investing in the currency. Futures are offered on some exchanges, including the CME, which involve speculating on the change in exchange rate of the Chinese yuan from today’s quote to a specified date in the future. Futures can be leveraged, as with forex pairs, though usually to a lesser level.

Another approach is to invest in exchange traded funds (ETFs), like the Chinese Yuan Dim Sum Bond Portfolio Fund or exchange traded notes (ETNs) that are designed to match the performance of the Chinese yuan or economic interest rates. These will not only appreciate with the currency, but also pay out dividends.

Alternatively, HSBC and other banks offer Chinese yuan savings accounts and time deposit accounts that can be opened with local currencies but are denominated in renminbi. This essentially allows you use money like the UK’s pound sterling to buy Chinese yuan as cash and hold it in these accounts so that invested funds appreciate with the currency, though withdrawals must also be made in different currencies and may incur a conversion fee.

Final Word On Chinese Yuan

It is very difficult to predict the future of the Chinese yuan, as it is with most currencies. However, the outlook is generally positive thanks to the continued growth of the Chinese economy, the rise in prominence of its currency, gaining reserve status, and the likely liberalisation of the yuan’s management. However, the ongoing trade war’s influence on the volatility of the renminbi may put some traders off.

While some may find the Chinese yuan an exciting trading opportunity, the continued intervention of the People’s Bank of China will keep the currency from reaching the popular trading volumes of major free market currencies.

Find out more about forex trading.

FAQ

What Currencies Can I Trade Against The Chinese Yuan?

With the advent of the offshore market for the renminbi, all convertible currencies can be traded against the Chinese yuan, such as the Pakistani (PKR) and Indian rupees (INR), Australian (AUD) and Hong Kong dollars (HKD), Vietnamese dong (VND) and South African rand (ZAR).

How Can I Predict The Performance Of The Yuan?

The tools listed in our article are some of the key indicators of China’s current economic status, making them useful for trading the Chinese yuan. Further information can be found online, including the latest 2024 news, index charts, graphs and bank forecast reports.

Can You Trade The Chinese Yuan Digital Cryptocurrency?

The digital yuan, known as the DC/EP (digital currency electronic payment) is often mistaken for a crypto coin, though it is technically just a digital currency as it is controlled by a central bank. The DC/EP cannot yet be traded as it is still in its development and early trial stages.

Is The Chinese Yuan Backed By Gold?

The Chinese economy does not use the gold standard, so the renminbi is not directly backed by gold. Instead, the country’s government plays a more prominent role in the price and value of the currency.

How Much Is A Chinese Yuan Worth Today?

The conversion rate today for buying Chinese yuan with USD or Euro can be found in live investing charts. Buying conversation rates and converters are offered by most online forex brokers and show how much Chinese yuan equals 1 USD.