China’s yuan may enter IMF basket with lower share: sources

Thu Nov 19, 2015 10:13am EST

China’s yuan may come into the International Monetary Fund’s benchmark currency basket at a lower weighting than the 14-16 percent range estimated by economists, people briefed on the Fund’s discussions told Reuters.

IMF policymakers are expected to add the Chinese currency to the Special Drawing Rights basket later this month, after a campaign by Beijing for the yuan, or renminbi, to have equal billing with the dollar, euro, pound sterling and yen.

Two people familiar with IMF deliberations said policymakers were considering changing the way the weights of currencies in the basket are calculated to make export volumes less important.

That would give China’s yuan, also known as the renminbi, a lower share in the basket than under the current formula. IMF staff calculated in July the current formula would give the yuan a weighting of about 14 to 16 percent and HSBC estimated it would have about 14 percent under the current formula.

“I would say that it’s too high,” one person briefed on the IMF discussions said, referring to the estimates.

A second person, an official of a major Asian country who saw the IMF staff report, said: “It’s barely a two-digit rate, just the minimum (rate to be a double-digit one).”

The SDR basket determines the mix of currencies that countries like Greece can receive as IMF disbursements and economists expect that inclusion will boost demand for the yuan.

Last set in 2010, the basket is currently 41.9 percent dollar, 37.4 percent euro, 11.3 percent sterling and 9.4 percent yen.

The IMF declined to comment.
(Reporting by Reuters bureaus; Writing by Krista Hughes; Editing by David Chance and Andrea Ricci)



Nuria Pujol