New load in currency basket
IMF penalizes euro for Chinese yuan
05/15/2022, 11:07 pm
The Chinese yuan is gaining popularity with the International Monetary Fund (IMF). The global financial institution is increasing the share of the currency in its reserve basket at the expense of the euro. The US dollar is also rising.
The International Monetary Fund (IMF) has increased the share of the Chinese yuan and the US dollar in its international currency basket in exchange for reducing the share of the euro. The international financial institution said over the weekend that the yuan’s share of the IMF’s reserve currencies rose 1.36 points from 10.92 to 12.28 per cent. The share of the US currency rose 1.65 percentage points to 43.38 percent.
The new weighting is based on the IMF’s five-year analysis of business and financial markets from 2017 to 2021. On this basis, the share of the euro in the IMF currency basket decreased more than ever. Its share declined by 1.62 percentage points to 29.31 percent. However, it is still second only to the yuan.
The IMF reduced the stake of the Japanese yen by 0.74 percentage points to 7.59 percent. The share of the British pound was reduced by 0.65 percentage points to 7.44 percent.
The IMF’s reserves, known as Special Drawing Rights (SDRs), were introduced in 1996. It is made up of the five most important currencies in the world: the dollar, the euro, the yuan, the yen, and the pound. The Chinese currency was included in the currency basket only in 2016. In doing so, the IMF took into account the growing global economic importance of the People’s Republic.
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