Yuan

The yuan is the primary unit of the renminbi, which is the official currency of People’s Republic of China. Renminbi means “people’s currency.” It is used in mainland China, but not in Hong Kong, where they have their own currency, the Hong Kong dollar. The yuan has been pegged to the U.S. dollar. Since 2005, the Chinese currency has been allowed to float, albeit in a tight range, as pressure from international governments is pushing Chinese officials to allow the yuan to appreciate. Some estimates are that the yuan is almost 40% undervalued, giving China a competitive advantage. While those figures are impossible to quantify, having a more free-floating exchange rate will be the real test in calculating where the value of the yuan really is.


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