Jake's View | Beijing has confused yuan’s inclusion in International Monetary Fund’s Special Drawing Rights with winning a beauty contest
Yuan’s share in world’s foreign trade overemphasised and overstated
The yuan is expected to be a shoo-in for the International Monetary Fund’s reserve currency basket after its managing director Christine’s Lagarde’s public endorsement of the currency, but its inclusion may come with a lower weighting.
Business, November 30
Christine “Loose Cannon” Lagarde has done it again, shot off her mouth in enthusiasm for a cheering audience and forced compliance from her subordinates, only to have them backtrack at an early date.
It is simply not yet time to include the yuan in the International Monetary Fund’s Special Drawing Rights, the basket of currencies that serves as its rescue fund for deserving indigent countries.
These currencies at present consist of the US dollar, euro, pound sterling and yen. Inclusion among them is confused in Beijing with winning a beauty contest. The Peoples Bank of China wants in because having an SDR currency would be a mark of a big grown-up country.
Its pleas for inclusion have regularly been turned down on the grounds that Beijing still maintains a closed capital account, the exchange value of the yuan is too closely managed and the yuan is little used outside of China.