China yuan: IMF win as currency granted higher weight in special drawing rights
- The Chinese currency’s weight has been raised to 12.28 per cent, 1.36 percentage points higher than the 2016 assessment
- China’s will for opening up is unshakeable, its central bank says, responding to doubts over its dual circulation and zero-Covid strategies
The Chinese yuan has been awarded a higher weight in the International Monetary Fund (IMF)’s five-yearly review of the special drawing rights currency basket, in an international acknowledgement of the currency and China’s economic status.
The Chinese currency’s weight will be raised to 12.28 per cent, an increase of 1.36 percentage points from the 2016 assessment, according to an IMF statement on Saturday. The decision will take effect from August 1.
The increase, however, was overshadowed by the 1.65 percentage point increase for the US dollar, which now accounts for 41.73 per cent of the currency basket, indicating great challenges ahead to break the US dollar’s dominance in the international financial system.
The euro maintained its No 2 place, although at a weight lowered to 29.31 per cent from 30.93 per cent. That of the Japanese yen and British pound were also lowered, to 7.44 per cent and 7.59 per cent, respectively.
China has tried to expand the overseas use of the yuan, starting from trade settlement and domestic financial opening. However, it is still held back by the currency’s partial convertibility and the country’s capital controls.