The International Monetary Fund admitted the yuan into the SDR basket of currencies on Monday and the People’s Bank of China has pledged to keep the currency stable as it vies to be a major economic player. Meg Teckman reports.
China's yuan, also known as the renminbi, finally got the stamp of approval on Monday (November 30) from the IMF to be admitted to its benchmark currency basket. Managing Director, Christine Lagarde announced the news. (SOUNDBITE) (English) INTERNATIONAL MONETARY FUND (IMF) MANAGING DIRECTOR CHRISTINE LAGARDE, SAYING: "The addition and the inclusion of the renminbi in the SDR basket of currencies is a recognition of the significant reforms which have been conducted, of the significant opening up of the Chinese economy, of the financial, more market-driven principles that are being used by the Chinese authorities going forward." The Special Drawing Rights basket previously included just four currencies: the U.S. dollar, the euro, the pound, and the yen. All of the basket's currencies gave up some of their current weightings to the yuan - the euro and the pound carving off the most, and the U.S. dollar's share barely affected. All helped along by a new formula for the SDR that places less emphasis on exports, and more on financial variables. The yuan's inclusion takes affect in October 2016 and investors are cautious about any devaluation of the currency to reflect the current state of the slowing economy. However the country's central bank vowed on Tuesday (December 1) to keep the currency stable, but did say it won't rule out intervention if there are abnormal movements. ENDS