IMF Lifts Chinese Yuan to Lending-Reserve Currency Status [ Current Affairs ]
Last week, China achieved an economic milestone. International Monetary Fund (IMF) has added the Yuan to its exclusive basket of reserve currencies; this move is designed to spur greater liberalization in the world’s No. 2 economy of China.
- This will be come in effect from next October.
- The International status on China’s currency will remove restrictions on its severely controlled exchange - rate and financial system.
- It also marks the start of a theoretically more dangerous course for China. And open markets, down the road, could add volatility to China’s trade picture and raise the risk of capital flight.
- With the IMF’s decision it ultimately put Yuan with the dollar, euro, pound and yen in the fund’s reserve - currency basket, IMF given more weight to China’s currency compare to the yen or pound.
- However the decision is increase national self - esteem of China, on the other hand it isn’t likely to drive a huge surge in Yuan buying.
- Soon Yuan will replace the Dollar as the world’s pre - eminent reserve currency, it will cause of many political and economic challenges of China.
- Spreading the yuan as a reserve currency is in part a simple salutation of China’s economic weight.
- The country now accounts for more than 15 % of the global gross economic output triple than time ago.
- For the Chinese Yuan’s higher status is part of a larger strategy to increase the country’s economic weight.
- Published on: December 1, 2015