LAHORE MIRROR (Monitoring Desk)– The International Monetary Fund has lifted the weight of China’s yuan and the US dollar in the institution’s worldwide basket of reserve currencies, while reducing the share of the euro, yen and British pound.
The IMF raised the weighting of the yuan, also known as the renminbi, to 12.28 percent from 10.92 percent, an increase of 1.36 percentage points, according to a valuation report released Saturday, reinforcing China’s currency status in the Special Drawing Rights (SDR) currency basket.
The value of the SDR, created in 1969, is based on a grouping of five major international currencies: the yuan and dollar, Japan’s yen, the pound sterling and the euro.
China joined the elite club of major global reserve currencies in 2016 in a step that further internationalized the Chinese currency as Beijing sought broader global economic recognition.
At the end of its five-year review, the IMF also boosted the weight of the dollar by 1.65 percentage points to 43.38 percent, growing its lead SDR position.
The revaluation of the Chinese and US currencies, and the maintaining of the five currencies’ rankings, were “based on developments in trade and financial markets over the period 2017-2021,” the IMF said in a statement.
The yuan’s share boost comes at a time the Chinese currency is undergoing sharp depreciation.
The price of the yuan — which moves in a range controlled by China’s government — has recently accelerated its decline, and on Friday stood at 6.789 renminbi to the dollar.
The euro retained second place in the SDR, but suffered the steepest fall, of 1.62 percentage points to 29.31 percent.
China’s renminbi was third. The yen maintained fourth spot while sliding 0.74 percentage points to 7.59 percent, while the British pound dropped to 7.44 percent, a 0.65 percentage point reduction.
