15/11/2015 09:45 AST

China's currency is poised to enter the big league of global currencies, according to the International Monetary Fund.

The body charged with global monetary cooperation have recommended the yuan be included in its Special Drawing Rights (SDR) reserve-currency basket, alongside the US dollar, euro, pound and yen, IMF managing director Christine Lagarde said.

Approval by the fund's board later this month is now all but certain, as major IMF shareholders including the US have said they will support inclusion if the yuan meets IMF criteria.

It would be the first change in the SDR's currency composition since 2001, when the euro replaced the German deutsche mark and French franc.

The Washington-based fund's endorsement would mark a major milestone in a decades-long ascent toward international credibility for the yuan, which was created after the second world war and for years could be used only domestically.

Approval would bolster President Xi Jinping's drive to keep opening up the world's second-largest economy.

Inclusion would also brighten a tumultuous year for China's economy, which has been hit by slowing growth, a tumbling stock market and a shift by authorities towards a more market-oriented exchange rate.

IMF staff members had determined that the yuan met the requirement of being "freely usable", Lagarde said.

"The IMF staff also finds that the Chinese authorities have addressed all remaining operational issues identified in an initial staff analysis submitted to the Executive Board in July," Lagarde said, adding that she supported the findings.

This "is a very clear and strong endorsement", said Brendan Ahern, managing director of Krane Fund Advisors LLC in New York. "No hesitation, no ifs, no buts. Very strong recommendation from Christine Lagarde."

"Essentially this is a done deal," said David Loevinger, managing director of emerging-markets sovereign research at asset manager TCW Group in Los Angeles.

The People's Bank of China said it welcomed the IMF staff proposal.

The yuan's inclusion would make the SDR more representative and attractive, enhance the international monetary system "and is a win-win result for China and the world," the bank said in a statement.

Chi Lo, senior economist, Greater China at BNP Paribas Investment Partners said: "It is the start of China's long-term sphere of influence with the yuan acquiring international status."

Lo believed China was ready to reach for the next signpost in its economic maturity and it may expand its debt issuance for cheaper financing as it aims for expansion in infrastructure investments and its "One Belt One Road" project.

Gaining the reserve status would be a crowning achievement in the career of Zhou Xiaochuan, governor of the People's Bank of China.

The banker had called for such reform in the SDR 61/2 years ago, on the back of the global financial crisis, when the over-dominance of the US dollar in global markets was seen to be contributing to global imbalance and market instability.

Zhou had held out the obscure SDR, the IMF's unit of account, as a potential badge of global prestige for China, persuading Communist Party leaders to open up the financial system and set up trading for the yuan around the world.


Ticker Price Volume
STC 80.00 582,963
BJAZ 14.46 2,040,087
US Dollar 1.00
Saudi Riyal 3.75
Derham Emirati 3.67
Qatari Riyal 3.67
Kuwaiti Dinar 0.30
Bahraini Dinar 0.38
Omani Riyal 0.39
Euro 0.88
British Pound 0.77
Japanese Yen 113.21
Lebanon central bank aims to bring dollar price down progressively: Salameh


The Lebanese central bank aims to bring down the price of the US dollar progressively with the agreement of licensed foreign currency dealers to help stabilise prices as much as it can, governor Riad

Gulf Times

South Africa's rand falls to 2-year low as Turkey rout spreads


South Africa's rand plunged more than 10 percent to a 2-year low against the dollar early on Monday and government bonds weakened sharply as a renewed rout in the Turkish lira spread to other emergin

The Peninsula

Kuwait denies cash buy to shore up lira


Kuwait has rebuffed as “ungrounded” reports that it injected KD 500 million ($1.6 billion) to back the Turkish currency of lira, which has been in free-fall over deteriorating ties with the US. Denyi

Arab Times

Euro traders await more signs of Turkey pain with banks at risk


There is little sign that the euro is about to turn around its rough patch against the dollar as concerns over the exposure of the region’s banks to Turkey ratchet up and bund yields slide back towar

Gulf News

Slumping pound makes everyone a currency trader as Brexit looms


The pound’s weakness is turning everyone — from students to holiday-makers — into unwitting currency traders as Brexit nears. Adam O Conghaile owed £36,000 ($46,300) to the UK government when he grad

Gulf News