An worldwide reserve asset, SDR was created by the IMF in 1969 to supplement the official reserves of member countries.
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China, the world’s second-largest economy, asked previous year for the yuan to be added to the Fund’s Special Drawing Rights (SDR) basket.
“Inclusion of yuan in the basket doesn’t immediately change our current exchange rate system”, he added.
During a meeting in Washington on Monday on the regular five-yearly review of the SDR basket, the International Monetary Fund (IMF) executive board, that represents the fund’s 188 members, decided that the yuan “met all existing criteria”, Global Times daily reported.
The BOT has gradually invested in yuan-denominated-bonds for diversification of international-reserve management while promoting the Chinese currency as an alternative for payment since 2010, he said.
Meanwhile, Nigeria’s external reserves depreciated by $238 million in November to $30.012 billion as at November 27, 2015, compared with the $30.250 billion it was as at November 2. Any impact from this inclusion on Thailand’s financial market is not expected to be significant, as the move is in line with expectations, Mr Mathee said.
Analysts suggested the addition of the yuan could possibly foreshadow further weakness in the currency as, to be successful, the yuan would have to meet a strict set of criteria that only the pound, euro, dollar and yen have so far been able to achieve.
Still, even if the yuan is indeed added to the SDR, it remains far from replacing the USA dollar as the top world currency.
Mr Mathee called the IMF’s decision to include the yuan in its SDR basket a testament to both China and its currency in terms of trade and foreign investment. The US dollar accounts for 64 per cent of global reserve currencies and almost 90 per cent of foreign exchange transactions. Nomura Securities predicts that the yuan will be one of the three major currencies used internationally by 2030 – nearly on the same level as the euro and the US dollar. “It is also a recognition of the progress that the Chinese authorities have made in the past years in reforming China’s monetary and financial systems”. To facilitate the yuan’s inclusion, China will accelerate capital and financial market reforms, and has no plans to devalue the currency to boost sinking exports and slowing economic growth, the vice governor of the People’s Bank of China (PBOC) Yi Gang said on Tuesday.
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“There is no obligation for central banks to align their forex reserve holdings with the SDR basket, but in practice, they pay a lot of attention to the basket’s composition and weights”, said Dariusz Kowalczyk, senior emerging market strategist at Credit Agricole.
