China’s yuan handed ‘vital’ IMF currency status

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The International Monetary Fund has announced that China’s yuan currency will be added to the fund’s basket of reserve currencies.

The IMF says the yuan “meets all existing criteria” and should become part of the basket in October 2016.

Currently only the US dollar, the yen and the pound are in the group.

Architas chief investment officer Caspar Rock says: “Inclusion in the IMF basket will allow China greater access to international capital markets and fund flows and international investor access to Chinese assets and currency.

“This may prove vital as the economy, which has been the main driver of global growth over the last few decades, seeks to finance the next phase of its expansion. China is seemingly starting to recognise that the price of this access is data transparency and further reforms of its system. This is an important decision given recent volatility and question marks over future growth.”