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Who cares about the Chinese Yuan?

  • 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)

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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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
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  1. 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.
  2. Yin-Wong Cheung & Menzie D. Chinn & Eiji Fujii, 2009. "China's Current Account and Exchange Rate," CESifo Working Paper Series 2587, CESifo Group Munich.
  3. 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.
  4. Funke, Michael & Gronwald, Marc, 2007. "The Undisclosed Renminbi Basket: Are The Markets Telling Us Something About Where The Renminbi - US Dollar Exchange Rate Is Going?," BOFIT Discussion Papers 20/2007, Bank of Finland, Institute for Economies in Transition.
  5. 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.
  6. Eric Girardin, 2011. "A De Facto Asian-Currency Unit Bloc in East Asia : It Has Been There but We Did Not Look for It," Finance Working Papers 23275, East Asian Bureau of Economic Research.
  7. Jarko Fidrmuc, 2010. "Time-Varying Exchange Rate Basket in China from 2005 to 2009," Comparative Economic Studies, Palgrave Macmillan, vol. 52(4), pages 515-529, December.
  8. Xiaoli Chen & Yin‐Wong Cheung, 2011. "Renminbi Going Global," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 19(2), pages 1-18, 03.
  9. 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.
  10. 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.
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