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A Synthetic Chinese Renminbi: Uncovering the Anchor Currencies

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We investigate the de facto exchange rate arrangements of the Chinese renminbi. A recently enhanced methodology is used to estimate a synthetic Chinese renminbi to uncover any anchor currencies. We find two anchor currencies, namely the US dollar and the Singapore dollar. However, the average R-squared is only 43.6%. Thus, the Chinese renminbi is less anchored to the US dollar. This implies that future research can classify the Chinese renminbi as a potential anchor currency.
Asia-Pacific Applied Economics Association
Title: A Synthetic Chinese Renminbi: Uncovering the Anchor Currencies
Description:
We investigate the de facto exchange rate arrangements of the Chinese renminbi.
A recently enhanced methodology is used to estimate a synthetic Chinese renminbi to uncover any anchor currencies.
We find two anchor currencies, namely the US dollar and the Singapore dollar.
However, the average R-squared is only 43.
6%.
Thus, the Chinese renminbi is less anchored to the US dollar.
This implies that future research can classify the Chinese renminbi as a potential anchor currency.

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