China wants yuan in SDR basket by 2015: report
06 Mar 2010
China wants its currency, the yuan, to be included in the basket of currencies that determines the value the special drawing rights (SDR), the unit of the International Monetary Fund (IMF).
China, which in March last year sought the eventual replacement of the dollar as the world's main reserve currency with the SDR, is now aiming at yuan's inclusion in the SDR basket by 2015, Japanese daily Sankei Shimbun said.
The SDR's value is currently based on a basket of four key currencies - the US dollar, euro, Japanese yen and the pound sterling. The basket composition, which is reviewed every five years, was last reviewed in January 2006 and the next review is due in late 2010.
With effect from 1 January 2006, the IMF had assigned the following weights based on their roles of the currencies in international trade and finance: US dollar (44 per cent), euro (34 per cent), Japanese yen (11 per cent) and pound sterling (11 per cent).
The weight for each currency is given on the basis of the average exchange rates for these currencies over the three months ending on that date in such a manner as to ensure that the value of the SDR will be the same under both the revised valuation and the existing valuation baskets.
China would have to liberalise its capital transactions to become eligible for entry in the SDR basket. Also, with its "loose" monetary policies, the United States may not agree to such a proposal unless China revalues the yuan against the dollar, the report pointed out.
