Recently i was reading an article on the currency swap between Bank of England with People’s Bank of China, and there I was kind of confused to their mention of Renminbi. Not that I didn’t knew about this as a Chinese currency, but at a same time I even recollected what was “Yuan” then, because even that is something known as currency of China. So I thought, like me, there would be couple of others too who would want to have some clarity on this subject, and hence this article.
According to Wikipedia:
Yuan: the basic unit of currency in China.
Renminbi: is the official currency of China (People’s Republic of China).
Now looking at this two above statements one would clearly get confused, so was I.
After studying about this currencies, i came up with a simple solution for everyone.
Here it goes.
-> Let’s take an hypothetical example, where imagine a country has Oil as its official currency, ie. they trade withing its regional border too in Oil for any goods/services.
-> Now, if you intend to buy or owe someone you wouldn’t just say, that you owe me 5 Oil. What I mean to say is that, there has to be some quantifying unit attached to it.
-> In this case, quantifying unit for Oil would be barrel. So now, you can mention like you owe me 5 barrels of oil.
-> The same way, longtime back in history, England did something like this. They made Sterling as its currency and Pound as its main unit. Today. thogh most people refer it to just as pounds.
-> So now back to China, in the same way, Renminbi is referred to as China’s currency. The units to the same are Yuan. So with relation to our example on oil, you would say you owe me 5 yuan and not 5 renminbi
So when is renminbi is used?
It is simply used when one denotes the chinese currency in abstract manner and not in a particular number of Yuan.
At current time the Fx rate stands at
1 USD = 6.22 CNY