New | Yuan strengthens as China adopts IMF accounting rule
Traders cheered by SAFE’s move to strive for yuan’s reserve status
Chinese yuan bounced back on Tuesday morning against the US dollar in the onshore spot market, as the nation’s foreign exchange watchdog said it will adopt the International Monetary Fund’s accounting rule in a move to strive for reserve currency status for yuan.
The onshore yuan strengthened 0.04 per cent, or 26 basis points, to 6.2076, reversing its losses on Monday, while the offshore yuan was unchanged at 6.2118 at noon. The People’s Bank of China set the benchmark midpoint rate at 23 pips weaker at 6.2079.
The State Administration of Foreign Exchange said in a statement on Tuesday morning that the watchdog will start to use the standard set by the IMF to calculate its balance of payments from 2015.
The change includes calculating the nation’s size of reserve assets, including its gold reserve and reserve position in the IMF, under the category of “financial account”.
In the past, it had been singled out as “reserve assets” on China’s payment balance sheets, on a par with the trade account and financial account, according to the statement.
Beijing has been keen on pushing its currency to join the IMF’s Special Drawing basket, a reserve currency basket that supports global central banks for urgent funding amid financial turmoil and natural disasters among others.
If the yuan is successful in joining the SDR basket, it is widely expected to attract more central banks to boost yuan-denominated investments.
Elsewhere, the Hong Kong dollar remained unchanged at 7.7522 to the US dollar, its strongest level since May 6, due to the recent US dollar weakness following weak American domestic economic data.
