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IMF lifts weighting of dollar, Chinese yuan in SDR basket -Breaking

© Reuters. FILE PHOTO – This illustration, taken on February 10, 2020, shows U.S. dollars and Chinese Yuan banknotes. REUTERS/Dado Ruvic/Illustration/File Photo

BEIJING (Reuters), – On Saturday, the International Monetary Fund stated that it increased the value of the dollar as part of its analysis of all currencies used in the valuation of Special Drawing Rights (SDR), which is an international reserve asset.

It is the first review since 2016 when the yuan or renminbi joined the currency basket. This was an important milestone in Beijing’s effort to internationalize their currency.

IMF increased the U.S. currency’s weight to 43.38%, from 41.73%. The yuan was raised to 12.28%, from 10.92%. The weight of the euro fell to 29.31%, from 30.93%.

In a statement, the IMF stated that its executive board determined the weighting of each trade-related and financial market development between 2017-2021.

According to the IMF, “Directors agree that neither COVID-19’s pandemic nor advancements in Fintech have had any major effect on the relative roles of currencies within the SDR basket thus far”.

The yuan has seen a decline in value, but it is now worth roughly 2% more than the dollar and has appreciated by about 6% relative to its main trading partners.

The People’s Bank of China stated that China would continue to support reforms and open its financial markets in a Sunday statement.

Effective August 1, the updated weightings will take effect

Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.