the same day that the Communist Party celebrates the founding of the
People's Republic of China in 1949 their currency joins the
International Monetary Fund's basket of reserve currencies.
yuan, also known as the renminbi aka "people's money", joins the U.S.
dollar, the euro, the yen and pound in the basket, which determines
currencies that countries can receive as part of IMF loans. It's the
first time a new currency has been added since the euro was launched in
Say the PBOC:
into the SDR is a milestone in the internationalization of the renminbi,
and is an affirmation of the success of China's economic development
and results of the reform and opening up of the financial sector"
The IMF announced the inclusion last year so the move is no surprise to markets.
On Thursday US Treasury Sec Jack Lew had this to say:
new IMF status recognizes the "enormous" change in China in the last 10
years that had made the yuan more open, but Beijing still had work to
do to make its currency and its economy more market-driven.
Being part of the SDR basket at the IMF is quite a ways away from being a global reserve currency."
IMF yesterday fixed the relative amounts of the five currencies in the
basket for five years, based on their average exchange rates over the
past three months
the yuan in the basket is a significant step in
China's financial reform programme and will limit its ability to
manipulate so we wait to see the real impact given that the yuan is yet a
fully traded currency.
The IMF has its own take on the inclusion here.