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The Chinese yuan is poised to become an international currency and play a major role in global finance which will havesignificantconsequencesfor countries, like Pakistan,which haverecently seen large inflows of the Chinese capital. Thispaper presents empirical evidence ofthe evolving nature of the yuan, as reflected in the statistical distribution of the exchange rate, with a particular focus on the period afterthe initiation of Belt and Road Initiative (BRI) projects. We observe that the currency’s empirical distribution exhibits tell-tale characteristics of a managed currency. Over time, though the yuan’s statistical properties have converged towards those ofother hard currencies, they still remain distinct. We find that there is a long-term trend of increasing correlations over time as indicatedby the Dynamic Conditional Correlations (DCC), which is pronounced in the post BRI period. Furthermore, the yuan is increasingly being influenced by other major currencies in the recent periods, indicating increasingly integration of the currency in global foreign exchange markets. This articlediscusses the implicationsof the rise oftheyuan for the management of Pakistan’s foreign currency reserves and exchange rate: it should be driven by the yuan’s evolving convertibility, credibility and liquidity.

In this paper, motivated by Nica and Speicher [Lectures on the Combinatorics of Free Probability, London Mathematical Society Lecture Note Series, Vol. 335 (Cambridge University Press, 2006)] and Kubo and Kuo [MRM-factors for the probability measures in the Meixner class, Infin. Dimens. Anal. Quantum Probab. Relat. Top.13 (2010) 525–550], we characterize a particular nilpotent case of a truncated forward shift operator by applying the technique of the random walks with repeated reflections and associated renewal equations. We also establish a stochastic order relationship by applying the crossing criteria.

Financial services sector has become a major driver of economic growth in the developing countries through innovation in response to the forces of globalisation and technology. Sound risk management practices by financial institution are critical to the stability of the institutions and to the sustainability of economic growth. Therefore, measurement of market risk is important to all market participants for devising risk management strategies. Value-at-Risk (VaR) is the most widely used measure of market risk, which is defined as the maximum possible loss to the value of financial assets with a given probability over a certain time horizon. However, the task of implementing the VaR approach still remains a challenge as the empirical return distributions are found to be fat tailed and skewed in contrast to the normal distribution as assumed in the theoretical models. An extensive literature in finance (e.g., Nassim Taleb’s The Black Swan) underscores the importance of rare events in asset pricing and portfolio choice. These rare events may materialise in the shape of a large positive or negative investment returns, a stock market crash, major defaults, or the collapse of risky asset prices.