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How China turned its currency into a strong foreign currency 1
From October 1, 2016, the IMF’s decision will officially take effect. This has been predicted since November 13, when IMF Director – Ms. Christine Lagarde asked IMF officials to give RMB (NDT)
RMB price fluctuations in the Chinese market compared to USD.
Bloomberg summarized the history of China’s yuan internationalization over the past 70 years:
1948
December 1: The first yuan is issued.
1978
December: China announces opening-up and reform policies under Deng Xiaoping.
1979
March: Foreign Exchange Administration is established.
1980
April 1: Foreign Exchange Certificates (FECs) are issued as currency for foreigners to use.
1981
January: RMB price for foreign payments is 2.8 yuan per USD.
1985
January 1: Consolidation of official and market exchange rates at 2.8 yuan per USD.
1990
November 17: Official exchange rate is 5.22 yuan per USD.
1993
November: China announced its long-term goal of adopting a floating regime and turning the yuan into a freely convertible currency.
1994
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China wants its currency to be as widely used as the USD.
January 1: China unifies the official and market exchange rates at 8.7 yuan per dollar, under the `floating exchange rate mechanism`.
April 18: China Foreign Exchange Trading System (CFETS) was established in Shanghai, allowing payment and trading of RMB with USD, yen and Hong Kong dollars.
1996
December: China allows foreign banks in Pudong district (Shanghai) to conduct transactions in RMB.
1997-1999
The US, Japan and other countries urged China not to devalue the yuan during the Asian financial crisis, for fear of causing a chain reaction.
2002
March 28: Then-PBOC Governor Dai Xianglong said China was considering the IMF’s proposal to value the yuan according to a basket of currencies instead of just the USD.
November 7: Chinese securities authorities announced regulations allowing foreign investment in Class A shares listed in RMB in China, through the Qualified Foreign Institutional Investor (QFII) program
2003
May: President George W. Bush’s administration calls on China to revalue or float the yuan.
2004
October 1: PBOC Governor – Zhou Xiaochuan and China’s Ministry of Finance – Jin Renqing met with G7 Finance Ministers in Washington.
2005
July 21: China ends its exchange rate peg to the USD, announcing that it allows the yuan to fluctuate against a basket of currencies.
2007
May 18: PBOC widens the daily trading band of the RMB against the USD, from 0.3% to 0.5%.
2010
June 19: PBOC commits to `increasing the exchange rate flexibility of the yuan`, but does not include a time frame.
August 17: China announces a pilot program for foreign financial institutions to invest in the interbank securities market.
2011
December 16: Started testing the Renminbi QFII program, allowing a number of foreign investment funds and securities companies to pour money into domestic RMB.
2012
April 14: China widens the daily trading band of the yuan from 0.5% to 1%, for the first time since 2007.
two thousand and thirteen
July 12: China loosens the cap on the Qualified Foreign Institutional Investor (QFII) program to $150 billion, from $80 billion, and expands the program beyond Hong Kong to other cities.
2014
March 17: China widens the yuan’s daily trading band from 1% to 2%.
June 19: RMB and British pounds are traded directly.
September 30: Yuan and euros are traded directly on the interbank foreign exchange market in China.
November 17: The Hong Kong and Shanghai stock exchanges officially linked, allowing 23.5 billion yuan (3.7 billion USD) of daily international transactions.
2015
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Chinese President – Xi Jinping and US President – Barrack Obama.
July 14: China simplifies interbank bond trading for central banks, financial institutions and foreign sovereign wealth funds.
August 4: IMF said China needs to make more efforts to include the RMB in the SRD.
August 11: China devalued the yuan by a record 1.9% against the USD, sparking the strongest sell-off since 1994. They also announced a method for determining a new daily reference rate, based on
September 10: PBOC said it would allow foreign central banks and sovereign investment funds to participate in the country’s currency market.
September 25: After a meeting between US President Barrack Obama and Chinese President Xi Jinping, the two sides announced an agreement stating that the US would support the RMB in the SRD.
October 20: PBOC sells 5 billion yuan of one-year bonds in London.
November 13: IMF officials propose that the RMB should be added to the SDR.
November 30: The Executive Board of the IMF – an organization representing capital for 188 countries, decides that the RMB meets the standards of `free use` and will join the Special Drawing Rights (SDR) along with the USD and euro