China’s Resistance to Reform May Grow With IMF Rejection

If the yuan is not included into the basket next year, China will have to wait another five years for the next review.

The temporary freeze on the current basket of reserve currencies comes just a week after Beijing’s surprise decision to devalue the yuan by about 3 per cent and change the way it sets the exchange rate.

The fund had been expected to include the Chinese yuan currency into its supplementary foreign exchange reserve assets on January 1, 2016.

The sudden devaluation of the yuan on August 11 was its biggest one-day movement in two decades.

The nine-month extension is expected to facilitate the continued smooth functioning of SDR related operations and responds to feedback from SDRs users on the desirability of avoiding changes in the basket. If a decision to add the Yuan to the currency basket was made the extension would also allow sufficient time for users to make needed adjustment.

China has been criticized by some for keeping its currency undervalued to gain a trade advantage for its exports.

The US dollar is the dominant currency in SDR along with the yen, pound and euro.

“The PBOC is still intervening”, said Tommy Xie, an economist at Oversea-Chinese Banking Corp in Singapore.

The Chinese renmenbi (RMB), also known as yuan. The Shanghai Composite Index fell by 3.4 per cent on Thursday following a 6 per cent fall earlier in the week.

(IMF) predicted a 6.8-percent growth this year in its annual Article IV Consultation Staff for, which matches ‘s goal of annual economic development around 7 percent., International Monetary Fund mission chief for, stressed that is entering a new normal and its economic development is safer and more sustainable despite a lower speed, which rules out the possibility of hard landing in the short term. Beijing said it was a move toward a more market-oriented method of determining exchange rates.