Not one to shy away from doing things differently to the rest of the world, China’s currency situation is no exception.
While most countries suffice with one currency type, China has two.
Although the two currencies are not worth the same amount, they are confusingly both referred to as the yuan (CNY) or renminbi (CNH), and share the same bank notes.
To tell each currency apart, look at where the transaction is settled – domestically or internationally.
Domestic transactions and international transactions have different ISO codes: CNY relates to the currency used in the domestic economy and CNH is for international trade.
While the local value of CNY is still dictated by the People’s Bank of China, the CNH is freely tradeable like most other global currencies.
Typically, the values of CNH and CNY will diverge depending on liquidity – i.e. how easily traders can attain a currency.
Additionally, if the People’s Bank of China wants to intervene in markets, then it will use the CNH.
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