The fund’s executive board approved an extension of the current basket of reserve currencies including in its special drawing rights, or SDRs, to September 30, 2016.
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When talking about ‘s recent reform in forex policy, which brought last week’s depreciation of the yuan, Rodlauer called the move praiseworthy as it allows a greater role for market forces in ‘s currency.
China devalued the renminbi in a surprise move last week, guiding the unit to its biggest one-day slide in two decades.
“So that is the cost of change, which is hard, is difficult all over the world, adjustment, but it has to happen and we are quite comfortable the way it happening, because it’s happening in a control and moderate way”, said, international Monetary Fund mission chief for.
To qualify for the basket, the country must be a major exporter, and the currency must be “freely usable”.
The report said freezing the current basket, which is due to expire on Dec 31, will give parties more lead time to adjust to any changes.
As the yuan’s fall broke a rally in the Standard & Poor’s 500 Index and prompted a commodities selloff, some US politicians were quick to label China a currency manipulator and raise fears of a new foreign-exchange war.
Washington has said that it hopes Beijing keeps reforming currency policies and meets the IMF’s criteria, but it has not tipped its hand on whether it will back any decision in November to add China.
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UBS economist Tao Wang is forecasting China’s economy will grow 6.8 per cent this year. Any decision would only go into effect late next year. The onshore spot rate in Shanghai is currently limited to moves of 2 percent on either side of a daily fixing set by the PBOC. He expected China to further widen exchange rate trading band in the future. “You need to go through some cycles, and get at least months, if not years of data to show China is allowing its currency to fluctuate through economic cycles”.
