BEIJING Oct 1 China's yuan joins the
International Monetary Fund's basket of reserve currencies on
Saturday in a milestone for the government's campaign for
recognition as a global economic power.
It is the first time that a currency has been added to sit
alongside the U.S. dollar, the euro, the yen and the British
pound in the IMF's special drawing rights (SDR) basket, which
determines the currencies countries receive as part of IMF
The IMF is adding the yuan, also known as the renminbi, or
"people's money", on the same day that the Communist Party
celebrates the founding of the People's Republic of China in
The IMF announced last year that it would add the yuan to
the basket, so actual inclusion is not expected to impact
financial markets. But it puts Beijing's often opaque economic
and foreign exchange policy in the international spotlight as
central banks add yuan assets to their official reserves.
Critics argue that the yuan does not fully meet IMF reserve
currency criteria of being freely usable, or widely used to
settle trade or widely traded in financial markets. U.S.
Republican presidential nominee Donald Trump has said he will
formally label China a currency manipulator if he wins
China stunned investors by devaluing the currency last year
and the yuan has since weakened to near six-year
lows, adding to worries about already feeble global growth.
Some China watchers also fear that Beijing's commitment to
further market opening and financial sector reforms will fade
after its diplomatic success, despite repeated reassurances from
Beijing it will continue with the process.
U.S. Treasury Secretary Jack Lew said on Thursday the yuan
was "quite a ways" from true global reserve currency status.
While recognising "enormous" change in China in the last 10
years that had made the currency more open, Lew said the
government still had work to do.
"Being part of the SDR basket at the IMF is quite a ways
away from being a global reserve currency," he said.
Capital Economics said inclusion of the currency in the
IMF's SDR basket will have minimal impact on foreign demand for
yuan assets, so "offers little support" for the currency.
"If anything, the risk is that official intervention to keep
the renminbi stable ahead of its inclusion will subsequently be
paired back, allowing for renewed deprecation," it said in a
(Reporting By Nathaniel Taplin; Editing by Neil Fullick)