Fun fact: there is Renminbi (RMB) before there is People’s Republic of China!
RMB became a currency in 1948, Dec 1 – so it has a “brief” history of 60 years now. It was pegged at less than 3 RMB/USD – which was clearly dislocated from the commercial reality at that time, and RMB’s real purchasing power. And of course it was not a freely circulated currency, so as a foreigner, you have to use foreign exchange certificates. All of us thirtysomethings should still remember that.
Because the RMB was pegged so high, there were dual rates running, so in the “black market” one can exchange to get a lot more RMB than at official exchange shops. From that level of 3 RMB/USD, the RMB continued to depreciate, until almost 8 RMB/USD before China’s central bank pegged it to a basket of currency at close to that value a few years ago. After that, the RMB has been on an up trend, appreciating to 6.8 now.
A country’s currency is a major reflection of its history and the underlying economy; and the development of RMB reflected how China as an economy has developed: the closed door policy, the gradual opening up, and the RMB strengthening in the past few years, as one of the world’s fastest largest large economies, with now the world’s largest foreign currency reserve - China is now the single biggest buyer of US Treasury – and hence a “lender” in effect to the US Government and George Bush for many years!
Many ways to read the world and a country, with its currency being one mean!