RMB: Into the SDR basket

The international Monetary Fund based in Washington completed its regular five yearly review of its Special Drawing Rights basket of currencies on Tuesday. The Chinese renminbi has been included in the basket after satisfying all the necessary criteria.

From Oct 1, 2016, the renminbi will be a freely usable currency and will be included in the SDR basket as the fifth currency along with the US dollar, the euro, the Japanese yen and the British pound. The Chinese currency is the first currency from a developing country to be added to the basket.

The SDR is an international reserve asset created by the IMF in 1969 to support its member countries' official reserves.

The value of the SDR will be based on a weighted average of the values of the basket of currencies. The respective weights of the SDR currencies will be 41.73 percent for the US dollar; 30.93 percent for the euro; 10.92 percent for the Chinese renminbi; 8.33 percent for the Japanese yen and 8.09 percent for the pound.