The Chinese yuan was little changed against the US dollar today after the International Monetary Fund decided yesterday to include the currency in its basket of currencies that make up the Special Drawing Right (SDR).
The IMF announced inclusion of the Chinese renminbi (RMB) in its basket of reserve currencies, saying:
The Board today decided that the RMB met all existing criteria and, effective October 1, 2016 the RMB is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar, the euro, the Japanese yen and the British pound.
The yuan’s share of the basket is not big (10.92 percent), though it is bigger than the Japanese yen’s (8.33 percent) and the Great Britain pound’s (8.09 percent).
In its Q&A section, the IMF explained what the decision means for China and its currency:
The inclusion recognizes a significant increase in the internationalization of the Chinese renminbi (RMB) in recent years, underpinned by policy reforms to achieve Chinaâs transition to an increasingly open and market-based economy.
Inclusion in the basket will also support the already increasing use and trading of the RMB internationally.
Market analysts are still divided whether it really was a significant move or just a symbolic gesture. Many economists say that China need to recruit more users for its currency to make the IMF decision really matter.
USD/CNY was basically unchanged at 6.3988 as of 12:28 GMT today.
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