When you send money back to relatives or friends in China, it’s only natural to want to obtain the most Chinese yuan renminbi through the transfer. After all, having worked hard to make your money in your current country’s currency, it’s frustrating to be hit by high transfer fees and a lopsided CNY exchange rate.
When converting dollars, pounds, riyals, or any other international currency to yuan, it’s helpful to understand how the system actually works. This guide, put together by our team at Remitly, will provide a quick summary, including pointers on how you can lower the cost of sending money to China.
Exchange rates explained
When you look at an exchange rate, what you see is how two currencies stack up against each other in terms of their value. Let’s imagine you’re looking to purchase yuan with US dollars. Checking the exchange rate, you see the following: 1 USD to CNY 7.12.
This means that one US dollar will currently get you 7.12 CNY. It’s important to remember the dollar-to-Chinese yuan ratio is prone to change.
There can be several reasons why sending money to China on two different dates may result in two different amounts in yuan. In fact, these rates change so frequently that throughout the day that they might be different from one minute to the next.
Some factors that can alter the currency exchange rate include:
- Inflation
- The countries’ respective import/export activity
- Economic and political instabilities
- Demand for the currency by traders
These factors can change regularly. If there’s a new political development where you live, for example, or a sudden fluctuation in the financial markets, there may be a knock-on effect on how your currency measures up against the CNY.
Ultimately, the rule to remember is that today’s exchange rate may be different from next week’s. As a result, it’s important to find out what the real rate is for that moment of time when you’re converting USD or another currency to CNY.
Why can Chinese yuan conversion be low?
Since the coronavirus pandemic, the yuan has steadily grown stronger in relation to the US dollar, the Indian rupee, and other currencies.
Charting the state of the yuan, or renminbi, is a complex business, as the currency is centrally controlled by the People’s Bank of China. While some market-based fluctuation is permitted to occur, any excessive shifts can lead to the central bank intervening to buy and sell CNY and keep things stable.
The good news is you don’t have to start second-guessing the People’s Bank of China, or the economic strategies of President Xi Jinping’s government, to get a great CNY conversion rate.
The key thing is to ensure you do some research to find what transaction fees money transfer services charge and what rates each one offers. This is something that’s entirely in your control. By choosing a cost-effective remittance service, you’ll get the most yuan for your money.
Sending money to China: converting to CNY
Whether you’re looking to convert EUR, USD, GBP, or any other currency to CNY, you can either do it through a bank or a specialist remittance service.
Banks
Financial institutions are still widely regarded as a convenient way to make a euro to CNY, dollar to CNY, pound to CNY, or any other currency to CNY exchange. It’s certainly quick and easy to use your financial institution to transfer money, as your funds are already in your account, and no third-party service is required.
The drawback to using your financial institution is that you may pay more for the service, or the rate may not be as favorable.
Remittance companies
Remittance companies make it easy to convert foreign currencies to CNY and send money to the PRC. Many allow you to originate transfers online or through mobile apps, so all you need to do is register for an account to get started.
Because remittance companies don’t have the overhead of brick-and-mortar branches, you may get a better deal when you use one for transfers. The fee you pay may be lower, so you’ll spend less, and the recipient will receive more.
Using Remitly to send CNY to China
Remitly can offer a fast way to transfer money to China due to our partnership with Alipay, a mobile payment platform with more than a billion active users. To get started, you just need to become a Remitly member by setting up an account in minutes.
All that’s required is some basic personal details, including your name, phone number, and payment details. Then, you just have to input your recipient’s Alipay login ID along with their name and the reason you’re sending the funds, like for family support. Sending money to China really is as simple as that.
Curious to know what some current exchange rates are? You can see the rate by clicking here for USD to CNY, GBP to CNY, EUR to CNY, or CAD to CNY.
Sending money from China: converting CNY to another currency
What about making a CNY to US dollar, CNY to pound, CNY to euro, or a similar conversion? It should be noted that using Alipay to make international transfers out of China is only an option for Chinese citizens. Foreign expats will need to depend on trusted Chinese friends to move money that way.
A wire transfer is another obvious option, but bear in mind that there are strict regulations around the whole process of transferring funds outside the country. Depending on the sender’s individual circumstances and status, proof may need to be shown to a bank that the money has been legally obtained and that taxes have been paid.
What about exchanging CNY outside of China?
You’ll have a few options to consider when exchanging Chinese yuan for currencies like US dollars, euros, and Saudi riyals outside of China. These include:
- High street, airport, and hotel currency exchange desks
- Foreign exchange at your financial institution
- ATMs
As a general rule of thumb, using exchange desks at banks, airports, and high street booths can be expensive. You’re effectively paying extra for the convenience of being able to purchase currency on the go without necessarily needing to plan ahead.
Wires can work if you have accounts in both China and the country whose currency you’re purchasing. As mentioned above, Chinese regulations may affect these kinds of exchanges, and fees may be high.
If you’re on a short stay in a particular country, you can always opt to withdraw local currency from ATMs on a day-to-day basis. It’s certainly a low-effort option, providing your card is accepted. However, you’ll probably be charged heavily for each transaction, which will add up. If you’re staying long-term, it’s wise to take time out to create a local account.
Before traveling, it’s a good idea to research your options and get an estimate on how much it will cost to obtain the U.S. dollar or other local currency. This way, you can decide which option is the most affordable and convenient.
Finding the best CNY exchange rate
Whatever method you use to transfer money from one country to another, the exact calculations will be automatically done for you. That said, you can get a good insight into what’s happening by working the transaction out yourself. Manually subtracting the associated fees will verify exactly what you’re getting with one transfer option compared with another.
Following are the formulas for conversion.
How to find GBP to CNY rates
Say you’re sending 100 GBP. Here’s how you work out the conversion:
100 GBP x 9.21 CNY
This would result in 921 yuan for your money. But that’s not the end of the story. There are also fees to factor in. If your money transfer service charges £15, or 138.15 yuan, for the transfer, you will subtract that from your initial total to see what your friend or loved one will receive:
912 CNY – 138.15 CNY = 782.85 CNY
With Remitly, you’d be charged £0.49 to pay by card or 4.51 CNY per transaction. So, in this example scenario, you’d save over 133 yuan on that one transfer alone.
How to find USD to CNY rates
Planning to transfer 100 USD? Here’s the calculation:
100 USD x 7.12 CNY
So, you’d initially get 712 CNY from 100 USD. As mentioned above, you’d take away fees to determine your final remittance amount.
How to find Euro to CNY rates
As a third example, let’s imagine you’re going to send 100 euros.
100 EUR x 7.90 CNY
What’d you get here is 790 yuan. As with the other examples, you’d then need to subtract any other costs to find out how much your recipient can look forward to getting.
Getting a better rate on your transactions
As this summary has hopefully made clear, sending money to China can happen in numerous ways, with numerous outcomes regarding how much is received.
Every yuan matters when you’ve been working hard to help and support the people you care about back home. For that reason, it’s important to do a bit of research and select a remittance service that guarantees a great rate and fair fees every single time.
