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The yuan is not convertible, like the yen, dollar, and euro are. It doesn’t float, it’s exchange rate is set by fiat.

When the yuan is actually traded in the wild, then it will move a few steps closer. I don’t think the government will ever let it get stronger than 6 rmb/usd, it would absolutely ruin their exports.




>it’s exchange rate is set by fiat.

Trade might be controlled, but definitely not flat http://www.xe.com/currencycharts/?from=USD&to=CNY&view=10Y


They directly adjust the exchange rate each day, it is not set by the market. There is a market based rate in Hong Kong for RMB (referred to as CNH), but it necessarily closely follows the government rate.


China also imposes heavy capital controls on the ability to move yuan into and out of the country and exchange it for other currencies, which makes it seem like an interesting choice here.


Oh ya, been there done that. Though I imagine they would let other countries hold some yuan with garauntee of conversion.




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