The International Monetary Fund is expected to add the Chinese yuan (AKA the renminbi) to its “special drawing rights” currency basket alongside the US dollar, Japanese yen, British sterling and euro.
If the IMF does indeed vote to include the yuan, it will signal a “significant milestone” for the country’s currency, according to insiders.
Andrew Malcolm, Linklaters law firm head of capital markets in Asia, said, “The direct impact won’t be felt in the near term, not least because implementation of the new basket won’t be until Q3 2016. However the symbolic importance cannot be overlooked.”
Beijing’s devaluation of the yuan last summer was lauded as a move to let the market correct the currency’s value. The action is likely one of the factors that has influenced the IMF’s expected inclusion of the yuan in the SDR basket.
This latest news casts further doubts on the dollar’s ability to retain its reserve currency status in the long run. Many experts believe the dollar’s days are numbered. Historically, reserve currencies last only four decades or so – the dollar has already lasted seven.
From The Guardian:
“Analysts at the Japanese bank Nomura predicted that the yuan will become one of the top three major international currencies – a peer to the US dollar and the euro – by 2030.”