China must wait until at least next year for the renminbi to join an exclusive club of the world’s top currencies, the International Monetary Fund said on Wednesday.
[Reposted from The New York Times | AP | August 19, 2015]
The fund’s board voted to leave unchanged until Sept. 30, 2016, a basket of currencies used in its operations. China, the world’s second-biggest economy, had wanted the I.M.F. to include the renminbi in the basket along with the United States dollar, the euro, the British pound and the Japanese yen starting Jan. 1. Unlike the other currencies, the renminbi does not trade freely. China sets a daily target and lets the currency trade 2 percent higher or lower. Last week, Beijing devalued the renminbi and said it would give market forces more say in determining the exchange rate — a move that the fund praised as a step in the right direction. The group of currencies is known as the Special Drawing Rights basket. It is a virtual currency the I.M.F. can use for emergency loans and member countries can use to bolster their own reserves in times of crisis. Joining the basket would give the renminbi the fund’s seal of approval, and might encourage foreigners to use the Chinese currency more and to have more confidence in China’s financial markets.