Yuan ends virtually flat on first day in IMF basket

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Yuan ends virtually flat on first day in IMF basket

The yuan began its first trading day as a global reserve currency with little fanfare, barely moving in overseas markets as Chinese investors stayed away on a weeklong holiday.

The currency entered the IMF’s Special Drawing Rights on Saturday - the basket’s first revision since 1999 - in a move that HSBC Holdings said will fuel financial liberalization in China. The inclusion is a recognition of the nation’s efforts to implement overhauls in its monetary, foreign-exchange and financial systems, Siddharth Tiwari, director of the International Monetary Fund’s strategy, policy and review department, said in comments posted on the lender’s website.

China has taken several steps to open its economy recently, allowing foreigners greater access to its $6.4 trillion onshore interbank bond market, scrapping quota restrictions on an inbound investment program and increasing communications with the market. Still, it retains strict currency controls by limiting onshore moves around a daily reference rate and through suspected direct intervention in the foreign-exchange market.

The yuan has weakened 2.7 percent against the dollar this year, the most in Asia, and dropped almost 7 percent versus a trade-weighted gauge as policy makers were seen encouraging declines to help an economy expanding at the slowest pace in more than two decades. Bloomberg

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