The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.
FOREIGN EXCHANGE

Foreign exchange: SDR revision taskforce paves way for renminbi rise

Offshore market meets convertibility rule; Global rebalancing bullish for Asian currencies

Last month China and France announced that they had agreed to form a taskforce to discuss the conditions under which the renminbi could become part of the IMF’s special drawing rights (SDR). This could have long-term implications for global currency markets. That task force will present its proposal ahead of the summit of leaders at the G20 in Cannes in November.

The development of a taskforce is important for two reasons. First, it recognizes that the world’s incumbent reserve currency, the US dollar, is no longer seen as being an unquestionable store of value. Secondly, the SDR basket would offer large creditor countries, such as China, an opportunity to reduce their reliance on the US as a destination to invest their vast trade surpluses.

Although there are several variables that determine the weights accorded to the SDR, the main one is international trade. As the weightings stand at present, the US dollar makes up 41.9% of the basket, the euro 37.4%, sterling 11.3% and the yen 9.4%.

Those weights are revised every five years by the IMF but can be revised earlier if the Fund finds that changed circumstances warrant it. According to some sources, at the last revision in November 2010 various comments by senior G7 officials suggested that a much earlier review might occur.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree