A synthetic Chinese renminbi: uncovering the anchor currencies

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