

EDIT, disclaimer: I’m writing this using USD as a primary example, but it holds true for many other currencies as well.
Because it’s not as freely traded as the USD. The main reason behind USD being so stable is because it’s available “anywhere”. And the reason for this is because it was always freely traded and easily bought by “anyone”. This results in loads of countries having USD as a foreigner reserve. On top of this, US monetary policy (not to be confused with US economic policy) values stability over anything else, resulting in a sought after currency for long term holdings, thus increasing its price.
The Yuan could in theory serve as a world reserve currency as well, but faces some challenges:
- Yuan has traditionally not been as freely available, so there’s simply less of it going around.
- Chinese monetary prioritizes economic power over stability. Trumps whining about Chinese devaluing its currency isn’t completely without merit.
- A strong Chinese economy is a rather recent phenomenon, so there’s not a whole lot of stable history to point to as an argument for buying a huge amount of Yuan as forex reserve
- The currency is subject to whatever the CCP considers best for China, not the currency.
This results in Yuan not being as attractive as the USD. Combine this with it being in the interest of the CCP to keep the currency somewhat low (because that’s in the best interest of their export capacity), and you get a Yuan trading for significantly less than its potential.
I honestly don’t see this changing any time soon. Having the Yuan as the de facto world default currency is simply not a priority for neither China nor other countries. And the ones who control its value have a vested interest in keeping it low.
It is worth noting that a “cheap” currency that can be bought for 1000 jimjams on the dollar doesn’t make it a low value currency. The exchange rate itself does not determine value, only the price. Value of a currency is derived from (percieved) future prospects of the currency. If it’s more or less certain that you can buy 1000 jimjams for one dollar, gbp, or euro 50 years from now, that makes the jimjams a valuable currency, even if the relative exchange rate is high.










Obligatory: The distro you run sucks. I don’t know which one you use, but it’s the wrong choice either way.