The Chinese yuan is gaining popularity with the International Monetary Fund (IMF). The global financial institution is increasing the currency's share in its reserve basket at the expense of the euro. The US dollar is also increasing.
The International Monetary Fund (IMF) has increased the share of the Chinese yuan and the US dollar in its international currency basket, in exchange for decreasing the share of the euro. The yuan's share of the IMF's reserve currencies rose 1.36 points to 12.28 percent from 10.92, the international financial institution said over the weekend. The share of the US currency was increased by 1.65 percentage points to 43.38 percent.
The new weighting is based on the IMF's five-year analysis of trade and financial markets in the years 2017 to 2021. On this basis, the euro's share in the IMF currency basket was reduced more than ever before. Its stake was reduced by 1.62 percentage points to 29.31 percent. However, it still ranks second ahead of the yuan.
The IMF lowered the share of the Japanese yen by 0.74 percentage points to 7.59 percent. The British pound's share was trimmed by 0.65 percentage points to 7.44 percent.
The IMF's reserve fund, known as the Special Drawing Right (SDR), was introduced in 1996. It is made up of the world's five most important currencies: the dollar, euro, yuan, yen and pound. The Chinese currency was only included in the currency basket in 2016. In doing so, the IMF took into account the growing global economic importance of the People's Republic.