Chinese Renminbi Approved by International Monetary Fund as World Currency

The head of the IMF, Christine Lagarde noted that the inclusion was “an important milestone in the integration of the Chinese economy into the global financial system”.

The IMF’s decision to consider the Chinese renminbi, also known as yuan, as a world currency will greatly expand its usage in the global trade, alongside other world currencies such as the U.S. dollar, Japanese yen, British pound and the euro.

Not every currency included in the SDR basket becomes a major reserve currency.

The announcement marks the start of the journey of the yuan (Renminbi) as one of the most important currencies in the world, although the actual start would be on October 1, 2016 yet, thus there would be no immediate impact on the financial markets around the globe.

According to the forex reserves movement figures on the Central Bank of Nigeria’s (CBN) website, the reserves derived mainly from the proceeds of crude oil sale, remained within the band of $30 billion throughout November.

The yuan’s inclusion is a largely symbolic move, with few immediate implications for financial markets. In addition, the BOT extended a bilateral swap arrangement worth 70 billion yuan (about Bt390 billion) with China, which appointed Industrial and Commercial Bank of China (Thai) as a clearing bank in Thailand.

“It also means that the worldwide community expects China to play a bigger role in the global economic and financial system”, the statement said.

“Canada welcomes the decision and feels confident that the inclusion of the RMB will increase the basket’s representativeness of the currencies used in the global trade and financial system”.

To meet the International Monetary Fund “freely usable” criteria, Chinese authorities undertook a series of reforms in recent months, such as improving its foreign exchange rate formation system, opening up its interbank bond and forex markets, and improving data transparency by subscribing to the IMF’s Special Data Dissemination Standard (SDDS), the report said.

“This decision is correct, as the Chinese economy and the Chinese currency has always been complying with the requirements that apply to the reserve currency”, he told Sputnik adding that the yuan held the fifth place in terms of volume of payments which were expected to grow further.

Market consensus continues to see the yuan weakening further next year to 6.6 per United States dollar to reflect economic fundamentals, according to Kasikornbank.

China’s central bank on Tuesday dismissed concerns over yuan depreciation after the currency’s entry to the IMF’s Special Drawing Rights (SDR) basket.

The currency will have a 10.92 percent share, in line with expectations, after a review of the weightings formula for the SDR, which determines which currencies countries can receive as part of International Monetary Fund loans.