China's yuan falls again in SDR basket

China's yuan falls again in SDR basket

In this undated photo, a clerk counts renminbi yuan banknotes in Nantong, East China's Jiangsu province. China's central bank said on its official website that the share of Chinese yuan in the Special Drawing Rights basket has gone from 10.92 percent to 12.28 percent.

The first SDR review by the International Monetary Fund took place in 2016 and the renminbi became the fifth currency in the SDR basket. The review occurred about a year later than originally scheduled due to the COVID-19 pandemic.

The euro's weight dropped from 30.93 percent to 29.31 percent. The yen fell from 8.33 percent to 7.59 percent and the British pound's weighting fell from 8.09 percent to 7.44 percent.

The IMF said in a statement that Directors broadly acknowledged the progress made on financial market reforms in China, while calling for additional efforts to open and deepen the onshore renminbi market.

The basket weights will come into effect on August 1, 2022.

The PBOC said that China will continue to drive the reform and open-up of the financial market, creating a better environment for overseas investors.

SDR is an international reserve asset that can be exchanged for freely useable currencies in times of need, which can be used as an alternative to official reserves.

The yuan was included in the SDR basket in 2016 as a fifth currency, along with the US dollar, the euro, the Japanese yen and the British pound.