When you send money back to relatives or friends in China, it’s only natural to want to obtain the most 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 lop-sided 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 will provide a quick summary, including pointers on how you can get the best deal when sending money to China.
Currency exchange explained
When you look at an exchange rate, what you’re seeing 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: USD/CNY 6.54
This means that one US dollar will currently get you 6.54 yuan. It’s important to remember this ratio is prone to change. Less than a year ago, for example, one dollar would have got you 7.14 yuan.
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 include:
- Interest rates
- The countries’ respective import/export activity
- Government debt
- 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 yuan. Ultimately, the rule to remember is that today’s exchange rate may not be the same as next week’s.
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 yuan 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 don’t pay over the odds when it comes to transaction fees charged by your money transfer service. 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 yuan
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.
Bank: This is still widely regarded as a convenient way to make a euro to yuan, dollar to yuan, pound to yuan, or anything to yuan exchange. It’s certainly quick and easy to use your bank to transfer money, as your funds are already in your account and no third party service is required.
Money transfer service: Using a specialist remittance, or money transfer, service can be a more affordable route to sending money to China. Digital companies such as Remitly don’t have bricks-and-mortar locations, meaning their running costs are lower. This means they can afford to pass these savings onto their customers in the form of lower transaction fees and a more cost-effective exchange rate. Although there are still fees involved.
Using Remitly to send to China
Remitly can offer a fast way to transfer money to China. That’s down to Remitly’s 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 – 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. For example, family support. Sending money to China really is as simple as that.
Sending money from China: converting CNY to another currency
What about making a yuan to dollar, yuan to pound, yuan to euro, or 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 bank 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 on the table when it comes to exchanging Chinese yuan for currencies like US dollars, euros, and Saudi riyals outside of China. These include:
- High street/airport currency exchange desks
- Foreign currency exchange at your bank
- Bank cards
- Bank wire
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.
Bank wires can work if you have accounts in both China and the country whose currency you’re purchasing. As mentioned above, there may be Chinese regulations that 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 very probably be charged heavily for each transaction, and these costs will rack up. If you’re staying long term, it’s wise to take time out to create a local bank account.
Finding the best yuan 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.
This is the formula for a conversion:
Send currency x Exchange Rate = Receive Amount
This is easy to understand when we use examples with real numbers. Below, is a hypothetical scenarios, which you can tweak and adapt with whatever quantities you’re intending to exchange.
How to find pound to yuan rates
Say you’re sending 100 GBP. Here’s how you work out the conversion:
100 GBP x 9 CNY
This would result in 900 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 135 yuan, for the transfer, you’d subtract that from your initial total to see what your friend or loved one will receive:
900 CNY – 135 CNY = 765 CNY
With Remitly, you’d be charged £1.49, or 13.41 CNY, per transaction. So, in this example scenario, you’d get a saving of over 121 yuan on that one transfer alone.
How to find dollar to yuan rates
Planning to transfer 100 USD? Here’s the calculation:
100 USD x 6.54 CNY
So, you’d initially get 654 CNY from 100 USD. As above, you’d take away fees to find out your final remittance amount.
How to find euro to yuan rates
As a third example, let’s imagine you’re going to send 100 euros.
100 EUR x 7.70 CNY
What’d you get here is 770 yuan. As ever, subtract any other costs to find out how much your recipient can look forward to receiving in China.
Getting the best deal
As this summary has hopefully made clear, sending money to China can happen in numerous ways, with numerous outcomes in terms of how much is received. When you’ve been working hard to help and support the people you care about back home, every yuan matters. For that reason, it’s important to do a bit of research and select a remittance service that guarantees a great exchange rate and fair fees, every single time.
Remitly is an international money transfer service that’s trusted by millions of people across the globe. Our user-friendly mobile app provides access to our fast and transparent payment platform, so you can transfer yuan whenever you need to without spending over the odds. Visit the homepage to find out more.