Currencies
The renminbi: how China manages its yuan
What moves the Chinese yuan, how the central bank sets a daily fixing, the difference between CNY and CNH, and its role in BRICS de-dollarisation.
The renminbi (referred to in English as the yuan) is the currency of China and one of the most watched in the emerging world. Instead of a free float, its value is managed by the People’s Bank of China (PBOC) within a band around a daily "midpoint".
Each morning the PBOC announces a central parity. The onshore spot rate may then move within a band around it. Because of this management the yuan is not a fully floating currency; its daily movements reveal central-bank policy as much as supply and demand.
In the BRICS story the yuan has become the main instrument of "de-dollarisation" talk, as trade settlement and reserve activity increasingly revolve around it. That gives the yuan a distinctive role in any study of the trend against the US dollar.
One detail matters: the currency trades onshore (CNY) and offshore (CNH), and the two can differ. The gap between them is one of the clearest market signs of pressure on the yuan.
Key facts
- Daily fix: The PBOC sets a daily midpoint around which the spot rate moves.
- CNY vs CNH: Onshore and offshore yuan can trade apart; the gap signals pressure.
- BRICS role: The yuan is central to trade-settlement and reserve talk.
- PBOC policy: The bank intervenes to keep moves within acceptable bands.
Frequently asked questions
Why do CNY and CNH exist?
CNY is the onshore rate that the authorities manage; CNH is the offshore market rate. The two can diverge from each other.
Does China fix the yuan?
It is not a fixed peg. The PBOC manages the rate within a band, allowing movement while keeping control.