Monday, November 30, 2015

BREAKING IMF Agrees to Include China's RMB in Benchmark SDR Currency Basket

The International Monetary Fund has agreed to add the Chinese yuan to its currency reserves basket.

The decision — which marks another step in China's global emergence — came after the IMF evaluated China's role as an exporter and the yuan's role as a "freely usable" currency. IMF Managing Director Christine Lagarde noted the currency's inclusion is a "clear representation of the reforms" taking place in China.

The addition of the yuan, or renminbi, will take effect next October.

This move in and of itself is not of major importance for the Chinese currency from a technical perspective though it will add some support to the currency when the IMF begins to accumulate it for its SDR basket. More significant is that it is another signal that the Chinese currency is a major currency---and another currency that traders will consider as an alternative currency when the inevitable collapse of the US dollar begins.

The SDR basket currently includes the U.S. dollar, Euro, Japanese yen, and pound sterling.



  1. I agree with Robert's analysis above. Since the family gathering and the big meal's memories are fresh in people's minds and leftovers are still in many fridges, a Thanksgiving simile came to mind.

    I liken the IMF to the family patriarch, loudly exclaiming that the (teenager) RMB's time has come. "Congratulations RMB", as he pulls out a chair at the global leader's adult table, "you've graduated from the kiddie table to now dine with the adults." Quite a signal indeed.

    Contrary to what Peter Schiff and the perma-bears may assert about the dollar demise, the key word is inevitable. Let's remember that the RMB just gained a seat at the adult's table. It's got a ways to go to unseat the patriarch's favorite son. And the dollar will not go peacefully into the night.

  2. The Chinese were using and abusing paper fiat back when your patriarch painted himself blue and ate his turkeys raw.