IMF Lifts Chinese Yuan to Lending-Reserve Currency Status

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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.

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