Chinese Yuan Now Becoming a Global Currency

October 7, 2014

Unlocking Word Meanings

Read the following words/expressions found in today’s article. 

1. monetary /ˈmɒnɪˌtɛri, ˈmʌn-/ (adj.) – relating to money or finance
Example: Part of a country’s economic power is its monetary influence worldwide.

2. mitigate /ˈmɪt ɪˌgeɪt/ (v.) – to make something less strict or less serious
Example: The bank benefited after the restrictions against international transactions has been mitigated.

3. deficit /ˈdɛf ə sɪt/ (n.) – the amount that is not enough or does not meet its expected value
Example: The national economy is likely to crash if the country does not keep track of its deficits.

4. keep a tight leash on /kip ə taɪt liʃ ɒn, ɔn/ (idiom) – to limit the freedom of something or someone by way of keeping control
Example: The government keeps a tight leash on banks that allow international transactions.

5. underdog /ˈʌn dərˌdɔg, -ˌdɒg/ (n.) – a player or competitor that is generally considered likely to lose a game or to remain insignificant compared with other competitors
Example: Before, Asian countries were underdogs in global finance.


Read the text below.
The Yuan [yoo-AHNChinese yyahn], China’s official currency, is becoming an emerging competitor in international monetary ranks, a financial study reported in July.

According to experts from the Institute of International Finance (IIF), the Yuan, officially known as the Renminbi [REN-MIN-BEE], has recently grown a distinguishable presence in various areas of global finance. It is currently the sixth most-used currency in worldwide transactions and the ninth most-traded currency in foreign exchange markets. The Yuan also placed second among the top currencies in trade finance, behind the US Dollar and ahead of the Euro and the Japanese Yen.

The IIF researchers say that Yuan grew because Beijing [BEY-JING] mitigated its restrictions on the currency’s international use. China’s strict control over its currency has received criticism, particularly from the United States. The United States has claimed that China keeps its currency unrecognized in global finance to improve its export trade and consequently, raise the United States’ trade deficit with China. Despite this, the Chinese government continues to keep a tight leash on the Yuan, partly to gain exclusive control of the Yuan-Dollar exchange rate.

Even with its growing influence on global finance, the Yuan is still an underdog compared with internationally high-ranking currencies such as the US Dollar (USD) and the Euro. As of this year, its exchange rate declined from CNY (Chinese Yuan) 6.05 to CNY 6.2 per one USD.

The IIF remarks that, despite its restrictions, China is carefully and gradually introducing the benefit of its currency in the country’s financial markets. However, further improvement is needed on the currency’s range of trade as well as its exchange rate before the Yuan can successfully expand beyond Chinese borders.

Viewpoint Discussion

Enjoy a discussion with your tutor.  

Discussion A

·         Would you use or spend with the Chinese Yuan? Why or why not?
·         What do you think will be the impact of Yuan’s rising popularity to China’s global economic status?

Discussion B

·         What is the importance of using currency in global trade?
·         Which would you prefer: a world with money or a world without money? Why is that so?

October 7, 2014