Foreign Exchange Guide to China
In this guide we review :
- Chinese yuan info - general info about the Chinese yuan
- Chinese yuan in the markets - recent CNY moves and predictions from the FX markets
- Travelling in China - currency & money saving tips
- Buying Chinese yuan cash online - travel money for China
- Sending money to China - save on Chinese yuan bank transfers to China
- Chinese yuan exchange rates - latest info & charts.
Chinese yuan (CNY) general currency information
The Chinese currency is actually called renminbi, but you will more frequently hear it called by the name of its primary unit, the yuan. The renminbi-yuan relationship is similar to that of Britain’s sterling-pound (sterling being the name of the currency and a pound being one unit of that currency). The ISO for renminbi, or the yuan, is CNY. An ISO of CHN denotes yuan traded in offshore markets, such as Hong Kong.
According to the Bank for International Settlements’ 2016 survey of the foreign exchange market, the yuan is now the world’s eighth most traded currency and has overtaken the Mexican peso to become the world’s most traded emerging market currency. However, disappointingly, 95% of all yuan trading remains against just one other currency, the US dollar.
The yuan reached its all-time low against the dollar in January 1994 when the exchange rate for USD/CNY reached 8.73. Its all-time high occurred in January 1981 when USD/CNY hit 1.53.
A high point for Chinese officials in recent years came when the yuan was added to the IMF’s Special Drawing Rights basket of currencies in October 2016 and, with its inclusion, joined the dollar, euro, yen and the pound as an official world reserve currency.
Importantly, China’s currency is not freely floating, which is to say that it is not determined wholly by market forces or purely by demand and supply. While market forces do play a part in China’s ‘managed float’ system, daily changes to the value of the yuan are restricted by the country’s central bank to moves of 2% above or below a midpoint, or reference rate, against the US dollar. This special rate is set each day by the central bank after consideration of the values of currencies from China’s main trading partners.
Chinese yuan (CNY) in the markets
The yuan gained 6.7% against the dollar in 2017, marking the currency’s best annual performance in a decade.
In mid-January, the yuan made it five straight weeks of gains as it climbed to its strongest level in four months at ¥6.46 per dollar. It should be said, however, that much of the yuan’s strength during this period was a result of broad US dollar weakness, rather than being a result of positive economic developments in China.
One development that certainly was positive was that suggested by Chinese Premier Li Keqiang in January. The Premier said that China’s 2017 economic growth would likely be 6.9% – well ahead of the 6.5% target. Official data would be released on January 18th.
For 2018, Commerzbank analyst Zhou Hao believes that the yuan will appreciate marginally in value against a basket of currencies.
In January, the PBOC announced that it had has eased controls over the yuan by removing the “counter-cyclical factor” from its calculations of the daily USD/CNY central rate. The CCF had been introduced in May 2017 to apparently lessen the influence of market forces on the yuan at a time when the currency was under considerable pressure. Upon the PBOC’s announcement, the yuan slipped – it had its worst day against the dollar in several months – but within 24-hours normal service had resumed with the yuan showing considerable strength in line with other Asian currencies.
China currency and money saving tips
China's international visitors have rocketed to an impressive 26 million in 2015. It is said that in less than 10 years, the country will become the first tourist destination with the world's largest number of visitors.
Credit cards are still not accepted in many places so it will be convenient to carry a travel card or cash with you. The highest denomination (100 yuan) does not carry a huge amount of value so if you intend to make large purchases you may be carrying a conspicuous wad of cash around with you. In only recent years, more and more banks around China have made this possible to the extent it is becoming standard.
Beware of people on the street side who offer services of money exchange. There has lately been a growing rate of ATM scam, where certain characters set up fake ATM's to scam credit card details. Just try to avoid any ATM that looks suspicious, or use the ATM's at major banks. There is also counterfeit money circulating in China, these are almost always smaller notes so try not to break up your larger notes all the time. Consider using a Pre-paid Travel Card if you are concerned about using your regular credit card in China.
China Trip Checklist
Travel money for China
Save money and time by Ordering your Chinese yuan online from Travelex, you get better rates and can pick up the CNY cash locally or even on travel day at the airport.
Another popular option is to use a Pre-paid Travel Card. Your Debit/Credit Card provider will charge you 2% from market mid-rate, but your bank may also charge an extra 3% as an “Overseas Transaction Charge” plus “Overseas ATM” fees for withdrawing cash.
For card purchases if offered a choice of currencies always select to Pay in Chinese yuan otherwise you may get much worst exchange rates.
Sending money to China
When sending money to China it’s important to compare your bank’s rates & fees with those we have negotiated with our partner money transfer providers. To get a better deal you should follow these 3 simple steps :
- Open an account with a BER reviewed FX provider (id docs may be required)
- You specify the local or Chinese yuan amount you want to transfer
- Make a local currency domestic transfer for the requested amount to the provider's bank account in your country
- Once your funds are received by the provider the converted CNY amount will be transfered to the recipient account you specify in China.
By comparing the rates of FX specialist providers rates versus your bank's standard rates you can hopefully save around 5% and maybe more - end result is more Chinese yuan deposited into the recipient bank account in China and less margins and fees kept by the banks!