CNY (renminbi)

What it is

The renminbi, meaning "people's currency" in Mandarin, is the official currency of the People's Republic of China, issued by the People's Bank of China (PBoC). The yuan is the basic unit of account. Two parallel markets exist: the onshore renminbi (CNY), traded within China's capital controls, and the offshore renminbi (CNH), traded freely in Hong Kong and international centres. Each morning at 9:15 a.m. Beijing time, the PBoC publishes a central parity rate ("fixing") against the US dollar via the China Foreign Exchange Trade System (CFETS); onshore trading is permitted within a band of plus or minus 2% around that fix. Key institutional actors are the PBoC, which manages monetary policy and rate levels; the State Administration of Foreign Exchange (SAFE), which administers capital controls; and CFETS, the inter-bank trading platform. The CFETS basket reference, introduced in December 2015, weights the yuan against 24 currencies with the US dollar carrying the largest single weight at roughly 20%.

History

The renminbi was introduced on December 1, 1948, when the PBoC was founded, replacing competing regional currencies. A 1955 redenomination set the rate at 10,000 old units per one new yuan. Through the 1980s China ran a dual exchange-rate system; the two rates were unified in January 1994 at approximately 8.7 yuan per US$1, a managed peg. On July 21, 2005, the PBoC revalued the yuan by 2.1% and shifted to a managed float against a currency basket. The daily trading band expanded progressively, reaching plus or minus 2% in March 2014. On August 11, 2015, the PBoC reformed the fixing mechanism to track market closing prices, triggering a sharp unexpected depreciation that jolted global markets in a move markets called the "mini devaluation." The IMF admitted the renminbi to its Special Drawing Rights basket in November 2015, effective October 1, 2016, at a weight of 10.92%.

Current state

As of mid-2026, the renminbi trades in a range of approximately CNY7.1-7.3 per US$1. The PBoC has used the daily fixing to resist significant depreciation, prioritising financial stability and capital retention over competitive devaluation. China's foreign-exchange reserves stood at roughly US$3.2 trillion at end-2025, the world's largest, giving the PBoC substantial capacity to defend the fixing. In FX trading, the renminbi reached 8% of global turnover in the BIS April 2025 survey. As a reserve currency, the IMF COFER database placed the renminbi at 1.95% of disclosed global reserves in Q4 2025, against the US dollar's 56.77% and the euro's 20.25%. SWIFT data for mid-2025 put the renminbi sixth in global payments at approximately 2.88-2.93% of value-based flows. China's e-CNY digital currency programme logged 3.4 billion transactions worth roughly 16.7 trillion renminbi by December 2025, the largest active CBDC in the world by volume, though adoption remains largely institutionally driven. The PBoC's June 2026 overnight reverse repo reform is improving the short-end rate framework that underpins CNY liquidity and bond-market competitiveness.

Relationships

The renminbi's level feeds directly into China's export competitiveness and has been a persistent source of US-China trade friction. China maintained approximately 40 bilateral swap-line agreements covering roughly RMB 4 trillion as of end-2024, extending CNY liquidity to trading partners in dollar-stress episodes. The Argentina-China swap renewal in 2026 illustrated how these lines function as de facto backstops for commodity-exporting economies. The SDR inclusion in 2016 raised the currency's institutional profile, yet reserve accumulation has remained modest, constrained by capital controls and questions about market depth and legal predictability.

What to watch

The pace of capital-account opening is the binding constraint on renminbi internationalisation: without freer cross-border flows, the currency's reserve share will grow slowly regardless of trade invoicing gains. China's push to settle oil and commodities in renminbi, including through the Shanghai International Energy Exchange, is the structural initiative to monitor for share-of-global-payments moves. The IMF reviews SDR basket weights every five years; whether the renminbi's weight rises at the next review will signal how much the fund's members have absorbed CNH market liquidity improvements. Domestically, the PBoC's shift to a price-based overnight rate framework, underway through mid-2026, is making yuan-denominated bonds more competitive for foreign capital, the most direct route to lifting the currency's reserve share.