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

    rating empty
    rating full

    Trade 48 currency pairs with low spreads from 0.1 pips and leverage up to 1:30 (EU) and 1:500 (Global). Micro lot trading is also available and new currency traders can make near-instant deposits with no fees.

  2. rating empty
    rating full

    FXCC offers leading fees compared to alternatives with spreads as low as 0.0 pips and $0 commission. Over 70 currency pairs are also available, providing more opportunities than most competitors.

  3. rating empty
    rating full

    Pepperstone offers ultra-low spreads from 0.0 pips on the Razor account and has an excellent selection of 60+ pairs. You can also trade currency indices, which aren't available at many alternatives. Forex lots start at 0.01.

  4. rating empty
    rating full

    Trade 85 major, minor and exotic forex pairs via CFDs on IB's FXTrader platform with tight spreads and low commissions, or trade forex on the spot market. They offer more FX assets than almost any competitor.

  5. XM

    rating empty
    rating full

    XM offers ultra low spreads across a wide range of forex assets with no re-quotes or hidden charges. Forex can be traded 24/5 on desktop, web and mobile. Over 50 currency pairs are available including all majors.

  6. rating empty
    rating full

    Trade 50+ major, minor and exotic pairs with an award winning platform. Users get institutional-level prices with spreads from 0.0 pips and low commissions. The VPS will also serve high-volume, active day traders.

  7. rating empty
    rating full

    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.

  8. rating empty
    rating full

    IG offers currency trading on its award-winning web platform and mobile app. Comprehensive charts and forex analysis tools are also available through ProRealTime.

  9. rating empty
    rating full

    Trade 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.

  10. rating empty
    rating full

    Plus500 offers forex trading via CFDs with tight, floating spreads and an excellent suite of 60+ currency pairs. We got spreads of 0.6 pips on the EUR/USD during testing - lower than many alternatives.

  11. rating empty
    rating full offers major, minor and exotic currency pairs available to trade as contracts for difference (CFDs) or spread betting (UK customers only). Spreads are competitive starting from 0.6 pips on the EUR/USD.

  12. rating empty
    rating full

    NinjaTrader supports the trading of popular currencies including the EUR/USD. The trading software also offers unique features tailored to forex trading, including specific order and market windows.

  13. Axi

    rating empty
    rating full

    Axi offers a great selection of 70+ major, minor and exotic currency pairs. There are no restrictions on trading strategies and the broker boasts impressive spreads by connecting to 20 liquidity sources.

  14. rating empty
    rating full

    Trade 170+ major, minor and exotic forex pairs with floating spreads and leverage up to 1:30. Forex futures are also available on some currency pairs. However the forex broker has a track record of amending margin requirements without appropriate notice.

  15. rating empty
    rating full

    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.

  16. rating empty
    rating full

    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.

  17. rating empty
    rating full

    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.

  18. rating empty
    rating full

    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.

  19. rating empty
    rating full

    Trade currencies with 0.0 pip spreads at one of the world's leading forex brokers. IC Markets is a great choice for serious traders with superior execution and low fees.

  20. rating empty
    rating full

    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.

  21. rating empty
    rating full is a leading FX broker. The brand offers a wide range of currency pairs and some of the lowest fees in the industry. Spreads on the EUR/USD come in as low as 0.0 with a $7 commission per $100k.

  22. rating empty
    rating full

    Go long or short on 50 forex pairs including the EUR/USD and GBP/USD with zero commissions. There are plenty of opportunities to buy and sell currencies via margin or copy trading.

  23. rating empty
    rating full

    An impressive selection of 52 currencies are tradeable on eToro's proprietary platform and app. Traders can also continuously hone their forex strategies by switching between demo mode and their live account any time.

  24. rating empty
    rating full

    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.

  25. rating empty
    rating full

    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.

  26. rating empty
    rating full

    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.

  27. rating empty
    rating full

    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.

  28. rating empty
    rating full

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

  29. rating empty
    rating full

    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.

  30. rating empty
    rating full

    Ingot Brokers offers forex trading on a modest suite of 30+ currency pairs with spreads starting from zero on raw spread account types. Currencies can be traded 24/5 though exotics are only available on MT5.

  31. rating empty
    rating full

    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.

  32. rating empty
    rating full

    Axofa offers 50+ forex pairs with raw spreads and low commissions. On the downside, the broker is not particularly transparent when it comes to their account conditions and fees.

  33. rating empty
    rating full

    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.

  34. rating empty
    rating full

    Trade binary options on 25+ forex pairs including a range of majors and minors, as well as precious metals paired with USD. Payouts top 80% and users can analyze market movements on the hugely popular MT4 platform and app.

  35. rating empty
    rating full

    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.

  36. rating empty
    rating full

    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.

  37. rating empty
    rating full

    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.

  38. rating empty
    rating full

    IQCent traders can access CFDs or binary options on 40+ forex pairs, including majors, minors and exotics. CFD spreads start from 0.7 pips and binary options payouts are decent up to 95%. Trading takes place through the broker's proprietary platform with advanced analysis tools.

  39. rating empty
    rating full

    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.

  40. rating empty
    rating full

    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.

  41. rating empty
    rating full

    Scope Markets offers MT5 trading for a range of major, minor and exotic currency pairs with high leverage and a low starting deposit. Multilingual 24/5 support is also available to support forex traders.

  42. rating empty
    rating full

    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.

  43. rating empty
    rating full

    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.

  44. rating empty
    rating full

    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%.

  45. rating empty
    rating full

    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.

  46. rating empty
    rating full

    VT Markets offers 40+ forex pairs including majors, minors and exotics with lightning-fast execution, up to 1:500 leverage and spreads starting from 0 available to ECN account holders.

  47. rating empty
    rating full

    Binary and OTC options can be purchased on over 40 foreign exchange pairs. Typical payouts are also decent at 81% and users can trade forex binary options in just a couple of clicks.

  48. rating empty
    rating full

    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 day trading strategies.

  49. rating empty
    rating full

    ForexChief supports spot foreign exchange trading on all account types for 40+ major, minor and exotic currency pairs on the leading MT4 and MT5 platforms. Spreads are tight starting from zero and there are no dealers or requotes.

  50. rating empty
    rating full

    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.

  51. rating empty
    rating full

    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.

  52. rating empty
    rating full

    AdroFX has a good forex offering of more than 60 pairs, which can be traded with up to 1:500 leverage via the MT4 platform or copy-traded with Allpips. The broker also offers very tight spreads starting from 0.4 pips and charges no commission.

  53. rating empty
    rating full

    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.

  54. rating empty
    rating full

    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.

  55. rating empty
    rating full

    Core Spreads offers trading on 34 forex pairs through spread betting and 40 currencies through CFDs, with both vehicles covering major and minor pairs. Spread betting spreads start from 0.6 for EUR/GBP; CFD spreads are variable and start from 1.2 pips on EUR/GBP.

  56. rating empty
    rating full

    Buy and sell over 50 currencies with zero pip spreads available via deep liquidity pools. M4Markets offers very low latency with execution speeds averaging 30ms. There are no restrictions on forex trading strategies.

  57. rating empty
    rating full

    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.

  58. rating empty
    rating full

    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'.

  59. rating empty
    rating full

    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.

  60. rating empty
    rating full

    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 day traders.

  61. rating empty
    rating full

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

  62. rating empty
    rating full

    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.

  63. rating empty
    rating full

    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.

  64. rating empty
    rating full

    LQDFX offers an extensive list of 70+ currency pairs, more than most alternatives. Spreads are ultra-low and high leverage is available on the market-leading MT4 platform.

  65. rating empty
    rating full

    Trade over 30 currency pairs with tight spreads from 0 pips. Forex traders have a choice of leading platforms including MT4, MT5 and an in-house web trader. The CopyFX system also lets you mirror experienced currency traders with a $100 minimum investment.

  66. rating empty
    rating full

    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.

  67. rating empty
    rating full

    SimpleFX offers a competitive suite of 60 forex pairs with average spreads of 0.9 pips. The charting features are extensive, with convenient mobile and desktop access for all experience levels.

  68. rating empty
    rating full

    Go long or short on over 50 forex pairs from majors to exotics, with spreads as low as 0.1 pips. Traders can analyze the currency markets with market-leading trading software and charts from MetaTrader 4.

  69. rating empty
    rating full

    During my tests, I was able to access a very competitive range of 90+ forex pairs with ECN spreads from 0.0 pips and leverage up to 1:500. FX traders can also make use of the Trading Central signals or the broker's daily forex analysis.

  70. rating empty
    rating full

    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.

  71. rating empty
    rating full

    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.

  72. rating empty
    rating full

    Trade 36 forex pairs, including the EUR/USD with spreads from zero pips. FXChoice offers higher leverage on forex than most competitors, alongside 24/5 support and an accessible $10 starting deposit.

  73. rating empty
    rating full

    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.

  74. rating empty
    rating full

    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.

  75. rating empty
    rating full

    FP Markets is a good option for forex traders, with 70+ pairs covering an excellent range of currencies. Spreads are already tight on standard accounts and start from zero on raw spread accounts, and the broker offers high leverage up to 1:500 and top-tier liquidity.

  76. rating empty
    rating full

    IronFX offers 80 currency pairs with an excellent selection of minors and exotics as well as majors. Trading takes place on the MT4 or a proprietary platform with spreads from zero available to ECN accounts. IronFX offers more currency assets than virtually all competitors.

  77. rating empty
    rating full

    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.

  78. rating empty
    rating full

    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.

  79. rating empty
    rating full

    Trade up to 33 major and minor forex pairs. This is a small range of currency pairs compared to competitors, with no exotics, but traders do benefit from tight spreads, low or no commissions and low latency.

  80. rating empty
    rating full

    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.

  81. rating empty
    rating full

    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.

  82. rating empty
    rating full

    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.

  83. rating empty
    rating full

    With 300+ forex pairs, Hantec Markets has one of the widest selections on the market. Floating spreads start from 0.2 pips with ultra-fast market execution and access to the leading MT4 platform.

  84. rating empty
    rating full

    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.

  85. rating empty
    rating full

    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.

  86. rating empty
    rating full

    With around 190 forex pairs and spot metals, 140 forwards, top-tier liquidity, fast execution and spreads from near zero, Saxo Bank offers exceptional flexibility and value to forex traders. Advanced charting from TradingView is another plus for active forex traders.

  87. rating empty
    rating full

    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.

  88. rating empty
    rating full

    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.

  89. rating empty
    rating full

    ThinkMarkets offers 46 forex pairs, including a decent variety of minors and exotics as well the majors. Forex traders also benefit from very tight spreads starting from 0.0 pips for the EUR/USD in the Zero account.

  90. rating empty
    rating full

    CMC Markets offers a superb list of 330+ forex pairs with tight spreads and ultra-fast executions. The selection of currencies is significantly wider than rivals.

  91. rating empty
    rating full

    FXTM offers 60+ forex pairs plus 6 indices which track a basket of popular currencies. The brand's ECN accounts offers impressive spreads from 0 with low commissions from $0.40 to $2 per lot and commission-free spreads start from 1.5 pips.

  92. rating empty
    rating full

    Trade FX pairs with tight spreads & leverage.

  93. rating empty
    rating full

    Trade 60+ forex pairs including majors, minors and a selection of exotics and crosspairs with fixed spreads from 1.8 pips or variable spreads from 0.8. FX traders also get advanced trading software in MetaTrader.

  94. rating empty
    rating full

    Trade over 90 pairs and keep costs to a minimum, with tight spreads and industry-leading commissions. Currencies can be traded 24/5 with no dealing desk intervention.

  95. rating empty
    rating full

    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.

  96. rating empty
    rating full

    Access over 40 currency pairs with no commissions and low spreads from 0.78 pips for EUR/USD. Forex can also be traded 24/5 on a choice of reliable platforms.

  97. rating empty
    rating full

    Go long or short on a range of major and minor currency pairs with tight spreads. Powerful trading software is available with a choice of instant and pending orders.

  98. rating empty
    rating full

    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.

  99. rating empty
    rating full offer a long list of forex CFD pairs for trading. All have competitive spreads. The firm also ensures negative balance protection

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.


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 2023 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.