IMF lifts weighting of dollar, Chinese yuan in SDR basket

BEIJING: The International Monetary Fund said on Saturday that it has increased the weight of the dollar and the Chinese yuan in its review of the currencies that make up the valuation of its special drawing rights (SDRs), an international reserve asset.

The review is the first since the yuan, also known as the renminbi, joined the basket of currencies in 2016 in what was a milestone in Beijing’s efforts to internationalize its currency.

The IMF raised the weight of the US currency to 43.38 percent from 41.73 percent and the yuan to 12.28 percent from 10.92 percent. The weight of the euro decreased to 29.31 percent from 30.93 percent, the yen fell to 7.59 percent from 8.33 percent and the British pound fell to 7.44 percent from 8.09 percent.

The IMF said in a statement that its Executive Board had determined the weighting based on trade and developments in the financial market from 2017 to 2021.

“The directors agreed that neither the covid-19 pandemic nor the progress within Fintech has had any major impact on the relative role of the currencies in the SDR basket so far,” the IMF said.

Although the value of the yuan has fallen recently, it has risen by about 2 percent against the dollar since 2016, and strengthened by about 6 percent against its main trading partner.

In a statement on Sunday, the People’s Bank of China said China will continue to promote reform and the opening of its financial markets.

The updated weights will take effect on 1 August.

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