As if you care:
So when china changed it's currnecy peg a couple of questions rose to my mind. First of all, how is the chinese government pegging to a basket of currencies?
Well it turns out that China is copying Singapore in this respect and claiming that they are going to peg to a basket of currencies, but not tell anyone what currencies are in the basket. Such a move will allow the chinese govenment to arbitrarily change the value of the Yuan when ever it is convenient for them to do so. All the while they can claim that the changes conicide with the changes in the currency basket. Those chinese government types are tricksy little hobbitses.
Now you may ask, shouldn't such a move open up China to massive amounts of currency speculation. The answer is no. Like many other aspects of chinese life the government plays a crucial role in currency exchange. This has two major implications. First of all, no matter where you exchange your money for Yuan you will always get the same rate with no extra "money changing charge." That is always nice, especially when you think about all of the places that rip you off when you exchange money. The second implication is that you have to have a permit to change your Yuan into another currency. So you have to either keep the recipt that proves that your money was originally dollars and have your plane ticket to prove that you are leaving, or you have to play hunt the buaerocrat. The permit requirement does insure that no one speculatets the currency.
Question number three: What is chinese currency really called? I have heard it refered to as Yuan and Renminbi. Well this is the deal. Renminbi, meaning "The People's Currency," is the name of the currency as a whole, like US Dollars Pounds and Euros. Yuan (pronounced Kuai) is the basic form of the currecny, something like a dollar. Jiao and Fen are like change. 1 yuan = 10 jiao. 1 jiao = 10 fen. So educated people will speak about the currency as the Renminbi, and when people talk about the exchange rate they will talk about yuan.
Well it turns out that China is copying Singapore in this respect and claiming that they are going to peg to a basket of currencies, but not tell anyone what currencies are in the basket. Such a move will allow the chinese govenment to arbitrarily change the value of the Yuan when ever it is convenient for them to do so. All the while they can claim that the changes conicide with the changes in the currency basket. Those chinese government types are tricksy little hobbitses.
Now you may ask, shouldn't such a move open up China to massive amounts of currency speculation. The answer is no. Like many other aspects of chinese life the government plays a crucial role in currency exchange. This has two major implications. First of all, no matter where you exchange your money for Yuan you will always get the same rate with no extra "money changing charge." That is always nice, especially when you think about all of the places that rip you off when you exchange money. The second implication is that you have to have a permit to change your Yuan into another currency. So you have to either keep the recipt that proves that your money was originally dollars and have your plane ticket to prove that you are leaving, or you have to play hunt the buaerocrat. The permit requirement does insure that no one speculatets the currency.
Question number three: What is chinese currency really called? I have heard it refered to as Yuan and Renminbi. Well this is the deal. Renminbi, meaning "The People's Currency," is the name of the currency as a whole, like US Dollars Pounds and Euros. Yuan (pronounced Kuai) is the basic form of the currecny, something like a dollar. Jiao and Fen are like change. 1 yuan = 10 jiao. 1 jiao = 10 fen. So educated people will speak about the currency as the Renminbi, and when people talk about the exchange rate they will talk about yuan.