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Who cares about the Chinese Yuan?

Author Info

  • Balasubramaniam, Vimal

    ()

    (National Institute of Public Finance and Policy)

  • Patnaik, Ila

    ()

    (National Institute of Public Finance and Policy)

  • Shah, Ajay

    ()

    (National Institute of Public Finance and Policy)

Abstract

The rise of China in the world economy and in international trade has raised the possibility of a rise of the Yuan as an international currency, particularly after the Chinese authorities have undertaken policy initiatives such as Yuan settlement and Yuan swap lines. In this paper, we measure one dimension of Yuan internationalisation: the role of the Yuan in the exchange rate arrangements of other economies. While the magnitudes are small, our findings show that as many as 34 currencies in the world have been sensitive to movements in the Yuan. This suggests that the Yuan potentially has a significant role to play in global exchange rate arrangements. Contrary to popular belief, however, we find a limited role of the Yuan among Asian. economies.

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File URL: http://www.nipfp.org.in/newweb/sites/default/files/wp_2011_89.pdf
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Paper provided by National Institute of Public Finance and Policy in its series Working Papers with number 11/89.

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Length: 23
Date of creation: May 2011
Date of revision:
Handle: RePEc:npf:wpaper:11/89
Note: Working Paper 89, 2011
Contact details of provider: Web page: http://www.nipfp.org.in

Keywords: Renminbi ; Yuan ; Exchange rate regime ; Internationalisation ; East Asia;

Find related papers by JEL classification:

  • F31 - International Economics - - International Finance - - - Foreign Exchange
  • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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  1. Eric Girardin, 2011. "A De Facto Asian-Currency Unit Bloc in East Asia : It Has Been There but We Did Not Look for It," Macroeconomics Working Papers 23275, East Asian Bureau of Economic Research.
  2. Yin-Wong Cheung & Menzie D. Chinn & Eiji Fujii, 2010. "China's Current Account and Exchange Rate," NBER Chapters, in: China's Growing Role in World Trade, pages 231-271 National Bureau of Economic Research, Inc.
  3. Zeileis, Achim & Shah, Ajay & Patnaik, Ila, 2010. "Testing, monitoring, and dating structural changes in exchange rate regimes," Computational Statistics & Data Analysis, Elsevier, vol. 54(6), pages 1696-1706, June.
  4. Colavecchio, Roberta & Funke, Michael, 2009. "Volatility dependence across Asia-Pacific onshore and offshore currency forwards markets," Journal of Asian Economics, Elsevier, vol. 20(2), pages 174-196, March.
  5. Patnaik, Ila & Shah, Ajay & Sethy, Anmol & Balasubramaniam, Vimal, 2010. "The exchange rate regime in Asia: From crisis to crisis," Working Papers 10/69, National Institute of Public Finance and Policy.
  6. Pontines, Victor & Siregar, Reza Y., 2010. "Fear of Appreciation in East and Southeast Asia: The Role of the Chinese Renminbi," MPRA Paper 25408, University Library of Munich, Germany.
  7. Jarko Fidrmuc, 2010. "Time-Varying Exchange Rate Basket in China from 2005 to 2009," CESifo Working Paper Series 3147, CESifo Group Munich.
  8. Iwan J. Azis & Nattapong Puttanapong, 2008. "A regional trend towards a basket peg system," International Journal of Trade and Global Markets, Inderscience Enterprises Ltd, vol. 1(2), pages 144-162.
  9. Xiaoli Chen & Yin-Wong Cheung, 2011. "Renminbi Going Global," Working Papers 082011, Hong Kong Institute for Monetary Research.
  10. Michael Funke & Marc Gronwald, 2008. "The undisclosed Renminbi Basket: are the markets telling us something about where the Renminbi - US Dollar Exchange Rate is going?," Quantitative Macroeconomics Working Papers 20812b, Hamburg University, Department of Economics.
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Cited by:

  1. Chang Shu & Dong He & Xiaoqiang Cheng, 2014. "One Currency, Two Markets: The Renminbi's Growing Influence in Asia-Pacific," Working Papers 102014, Hong Kong Institute for Monetary Research.
  2. Arvind Subramanian & Martin Kessler, 2012. "The Renminbi Bloc is Here: Asia Down, Rest of the World to Go?," Working Paper Series WP12-19, Peterson Institute for International Economics, revised 2013.
  3. Michael Funke & Chang Shu & Xiaoqiang Cheng & Sercan Eraslan, 2015. "Assessing the CNH-CNY pricing differential: role of fundamentals, contagion and policy," BIS Working Papers 492, Bank for International Settlements.
  4. Kawai, Masahiro & Pontines, Victor, 2014. "The Renminbi and Exchange Rate Regimes in East Asia," ADBI Working Papers 484, Asian Development Bank Institute.
  5. Kawai, Masahiro & Pontines, Victor, 2014. "Is There Really a Renminbi Bloc in Asia?," ADBI Working Papers 467, Asian Development Bank Institute.
  6. Reuven Glick & Michael M. Hutchison, 2013. "China’s financial linkages with Asia and the global financial crisis," Working Paper Series 2013-12, Federal Reserve Bank of San Francisco.
  7. Kawai, Masahiro & Pontines, Victor, 2016. "Is there really a renminbi bloc in Asia?: A modified Frankel–Wei approach," Journal of International Money and Finance, Elsevier, vol. 62(C), pages 72-97.

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