WASHINGTON (Reuters) - The International Monetary Fund said on Friday it set new relative amounts of the currencies in its Special Drawing Rights currency basket, reflecting the entry of China’s yuan for the first time on Saturday.
The IMF said each SDR, the Fund’s unit of account, will be made up of 0.58252 U.S. dollars, 0.38671 euros, 1.0174 Chinese yuan, 11.900 yen and 0.085946 pounds sterling. The relative amounts reflect weightings determined last year based on average exchange rates over the past three months. The amounts are now fixed for five years.
The inclusion of the yuan marks the first change in the IMF’s currency basket since the 1999 adoption of the euro. It also marks a significant milestone for the yuan, as the Fund has declared it to be a “freely usable currency.”
“The Renminbi’s inclusion reflects the progress made in reforming China’s monetary, foreign exchange, and financial systems, and acknowledges the advances made in liberalizing and improving the infrastructure of its financial markets,” IMF Managing Director Christine Lagarde said in a statement.
She added that continuation of these efforts will help strengthen the international monetary and financial system, which in turn will support growth and stability in China and globally.
Some contend, however, that while the step reflects progress, China has far more work to do to make its currency and economy more market-driven and open. Without this, the yuan will not achieve true reserve currency status, U.S. Treasury Secretary Jack Lew said on Thursday.
Reporting by David Lawder; Editing by Bernard Orr