It refers to renminbi that can be freely converted into foreign countries.
In November 1967, China suffered a certain loss. In order to avoid further losses due to the depreciation of foreign currency, Chinese foreign trade is denominated in RMB since 1968.
That is, China’s imported goods are priced in RMB. Foreign importers make payment for China’s exports in RMB, and Chinese import goods are also paid to foreign exporters in RMB.
Foreign banks and importers and exporters, in order to trade with China, may, on a voluntary basis, sell foreign exchange to the Bank of China for renminbi and open a foreign exchange renminbi account with the Bank of China.
Contracts signed in international trade have always been denominated in sterling, marks and other free foreign currencies.
In the 1960s, the international financial markets were volatile and several Western currencies were devalued, while the Chinese market prices were stable.
In this case, in 1968, our foreign trade began to try out the RMB valuation.
Because at that time, the value of the yuan currency stable, the use of foreign exchange renminbi as the numeraire, can benefit to both the seller and the buyer, so the big Banks in the world in order to promote trade with China, successively in open a foreign currency deposit account with the bank of China, so as to facilitate their country’s trade with China merchants, receipts and payments.
From then on, in international trade, in addition to trade contracts signed with free foreign exchange, there appeared trade contracts denominated in foreign exchange and renminbi.
The use of foreign exchange renminbi was later extended to non-trade balance of payments.
Such as remittance, payment for goods, etc.
But because it itself DOES NOT HAVE ANY form of paper money or coins, can only through the transfer and international to carry out the collection and payment on the books, and can not be directly withdrawn from any account.
Foreign exchange RMB is different from the free foreign exchange of market economy countries, it is not allowed to circulate freely in the international market.
At the same time, the trading of foreign exchange RMB shall be conducted through the Bank of China in accordance with certain scope and regulations:
1, foreign businessmen through its entrust a bank to buy and sell yuan in China, must by sign trade contracts with Chinese enterprises to deal with, and want to use the two sides agreed the convertibility of the renminbi, deposited in the bank of China to open special RMB account, to pay for trade payments related to the trade and the freight, insurance premium, commissions and other affiliate fees;
2. In principle, the use of foreign exchange RMB for valuation and settlement is limited to the settlement of bilateral trade, and the balance of foreign exchange RMB account cannot be transferred to a third country;
3. The currency used for trading foreign exchange RMB shall only be the convertible currency agreed by the banks of both parties, and in principle, the currency of the country where the bank of the other party is located.
If the RMB is not fixed for that country’s currency, or that country’s currency is not freely convertible, the convertible currency of a third country used by the local bank may be used;
4. The foreign exchange RMB deposits of foreign banks in the Bank of China can be converted into the above freely convertible foreign currencies and remitted at any time.
The dollar stabilizes, gold bulls flee, OPEC looks to ditch Russia, U.S. oil hits 120.
Please pay attention to the specific operation, the market is changing rapidly, investment needs to be cautious, the operation strategy is for reference only.
