Yuan finally joins the IMF's SDR basket today
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The Chinese yuan is today added to the IMF's Special Drawing Right basket
On 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.
The 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 1999.
Say the PBOC:
"The inclusion 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:
"The 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."
The 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
Including 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.