China’s yuan trades in the U.S. for the first time
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JEREMY HOBSON: Treasury Secretary Tim Geithner said this morning that China’s
currency – the Yuan – remains substantially undervalued. His comments come as President Obama prepares to welcome China’s President Hu Jintao to Washington next week.
But today the U.S. got a visit from the Yuan itself. For the first time, China’s largest state bank is allowing its customers to trade its currency in the United States. And it has some people talking about the Yuan becoming a global currency.
Marketplace’s Rob Schmitz reports from Shanghai.
ROB SCHMITZ: Comments on American news sites that broke the news of the Yuan’s arrival to the US reeked of conspiracy: Many agreed that China’s currency, also known as the Renminbi, would soon replace the U.S. dollar as the world’s de facto reserve currency. Beijing economist Arthur Kroeber isn’t one of them.
ARTHUR KROEBER: The Renminbi has a long, long, long way to go before it even becomes a significant international currency.
According to the latest international figures on foreign exchange trading, about 80% of all foreign exchange transactions in the world use the dollar. The figure for the Renminbi? Zero-point-three percent. In order to become a reserve currency, you’d need a transparent government bond market-China’s government bond market is mostly closed to foreigners and there are literally days in which no government bonds change hands. The average daily volume in the US treasury market is 600 billion dollars. Still, if you’re interested in opening a Renminbi account, The Bank of China’s three offices in New York and Los Angeles are ready to take your money.
In Shanghai, I’m Rob Schmitz, for Marketplace.
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