IMF Launches New SDR Basket Including Chinese Renminbi, Determines New Currency Amounts

[yota691]

China seeks to insert the renminbi in the global currency basket

 

 

9/28/2016 0:00  Being has the largest economy after the United States  Beijing / follow - up - morning ,  China is seeking to currency inclusion (renminbi) in foreign currency basket , along with the euro and the dollar and the rest of the other world currencies since he has China 'seconomy from strength made him second in the world after the US .  , and analysts say that with the sustained economic growth and higher yields of the bonds, China has seen externally increasing attention to the use of its currency and keep government Psondadtha, despite a decline in the value of the renminbi against the US dollar in the months  past.  After the founding of the first clearing bank for the Chinese yuan (RMB) in the US United enter the renminbi imminent to reserve currencies main basket, the renminbi has been made the latest victories on the path of transformation into the currency  world.  the Central Bank of China, delegated the Bank of China branch in New York to provide clearing services in yuan in the United States, and is the first time that establishes where China banks for clearing their own currency in the United States, to join the list of banks , clearing the yuan in Hong Kong, London, Singapore, Toronto and other cities abroad, which is expected to promote the international use   of the Amlh.kma China Central announced that he authorized the Moscow Office of industrial Chinese commercial Bank, the largest bank in China , to provide clearing yuan - denominated services in   Russia. All  these moves come days before the inclusion of the yuan in the SDR currency basket of the IMF, which will enter into force starting from the first day of next October, to become China 's currency is one of the reserve currencies of the five ratified by 189  Fund.  the private basket of world currencies currently list both the US dollar and the euro and the Japanese yen and the pound  sterling.  officials and analysts point out that these developments will increase the momentum of the rise of the renminbi.  , said Timothy F. Geithner, co - chairman of the working Group on trading and clearing of the renminbi in the United States in a press statement that « the establishment of a clearing bank in the United States would promote the growth of activity of the renminbi in the country and helps to absorb the increase in size and the demand for products and services for the   renminbi.»  He described Siddharth Tiwari, director of strategic management, policy and review of the international Monetary fund, the next insertion of the yuan in the SDR basket «as animportant milestone in the global financial integration process   to China.»  the renminbi 's fifth most widely used currency in international payments in value terms in July, with a share of 1.9 percent, up from 1.72 percent in June, according to data from the Organization global transaction Services  (SWIFT).  showed the IMF that the yuan was about 1.1 percent of official reserves retained by central banks all over the world at the end of 2014. Zhou Cheng John predicted that the 4 percent rate in excess «soon» after you insert the yuan in the SDR basket   own.  as Standard Chartered Bank predicted that brings the insertion of 6.2 trillion yuan in net purchases of internal bonds in China by the end of   2020.  last month, the World Bank issued bonds Tqovernma SDR currency basket worth about $ 700 million in a market among Chinese banks, to use the yuan for the first time as the currency of   settlement.

[copper13]

China Marks Milestone With Yuan’s Entry Into IMF Reserve Basket

 

China’s yuan officially enters the International Monetary Fund’s basket of reserve currencies Saturday, a telling trophy in the transformation of the Asian giant’s geopolitical status.

Along with the dollar, the euro, the yen and the pound, the yuan will now be used as one of the IMF’s official lending currencies in emergency bailouts. The fund’s stamp of approval confers a measure of legitimacy on the yuan after a yearslong effort by Beijing to internationalize its currency.

The move shows how China’s financial diplomacy has evolved from heavy-handed aid to governments in decades past to a multipronged strategy to challenge the U.S.’s global economic dominance.

http://www.wsj.com/articles/china-marks-milestone-with-yuans-entry-into-imf-reserve-basket-1475260422

 

hey guys...Not sure if this belongs here? But will this affect the Iraqi dinar?

Edited October 1, 2016 by copper13

[Flamtap]

Seems as if it's all unfolding before our very eyes if true......

 

Go RV 

[Laid Back]

2 hours ago, Flamtap said:

Seems as if it's all unfolding before our very eyes if true......

 

Go RV 

Agreed.!

It's coming. Just seat back and relax.

Go $1:1

[Wiljor]

1 hour ago, Laid Back said:

Agreed.!

It's coming. Just seat back and relax.

Go $1:1

Got an extra hammock my friend?, I can be in relax mode in a heartbeat  

[Laid Back]

15 minutes ago, Wiljor said:

Got an extra hammock my friend?, I can be in relax mode in a heartbeat  

Yes my friend. I have a beautiful Mexican hammocks that you can use😀

 

[sandfly]

Thanks 

[Caye98]

On 10/1/2016 at 1:33 AM, Botzwana said:

Forgive me but what does this have to do with Iraq?

No problem, this is the Word Economy thread, and many people are interested in what is taking place in the world, and how it might affect them (and their investment). 

In the VIP Section there is a great deal of information on such activities, and this thread has been left open to everyone to access. 

In this particular incident comma with China being accepted into the reserve currency basket of the IMF is potentially huge. Many feel this is yet another step towards a Global Currency Reset, in which case the US dollar could be reduced by any and pulled him out but 1/2 the current value would not be out of the range of possibility. On the other hand simultaneously the IQD could increase in value to the equivalent of again any unknown number but, the equivalent of. 05-.10 to $3 + current USA. ( of course in this scenario every other currency could potentially be valued as well). 

No, this is not a conspiracy theorist plan, but has the potential to be a very real occurrence that may/or may not occur, potentially in the very near future.

Just one example might be, the movement in the US to increase in minimum wage to $15 an hour. Taking in and of itself is one thing, however if you take into account that hard currency may be worth half as much, then it wouldn't be much of a change at all,  if gasoline became $5 a gallon, and milk, and a dozen eggs.

Now again, I'm not saying this is happening now, and it may never happen. But there may well be as much likelihood of this  Global Currency Reset taking place as there is of the currency value in Iraq increasing beyond $0.01 USD. 

[yota691]

The inclusion of an official Chinese renminbi in the SDR basket

 

 

3/10/2016 0:00  Capitals / follow - up / morning  confirmed a Mexican expert that the Chinese currency , the inclusion of the renminbi in the SDR of the IMF basket reflects the financial and monetary stability of China.  Basket of currencies  and included the renminbi officially on Saturday , within the global reserve currency to become an international currency fifth alongside the US dollar sterling, yen, pound Japan and the European euro.  strong Chinese currency is enough to be used in international transactions and stored as a reserve currency.  among Ignacio Martinez Curtis, a professor at the status of international relations of the independent national University of Mexico, the need to move to modify the global financial system , which has remained largely unchanged since 70 years.  data the «Swift»  the renminbi 's fifth most widely used currency in international payments in value terms in July, with a share of 1.9 percent, up from 1.72 percent in June, according to data from the global transaction services organization SWIFT.  Martinez said that » the first impact of the entry RMB currency basket of the IMF is that the loans , which would give the fund from now on will be linked to the Chinese currency ».  he added that« this no doubt reflects the cash strength of China around the world. If it is not China 's strong economy, and not its currency strong support, what was the renminbi got a share of 10.92 percent from the beginning of October October », referring to the distribution of the International Monetary Fund in what is called the weight of each currency in the new SDR basket.  Weight renminbi  came« Weight »renminbi Third after the dollar (41.73 percent) and the euro (30.93 percent) and pre - yen (8.33 percent) and sterling (8.09 percent).  According to the international monetary Fund,« the currencies that qualify for the basket are those issued by the members of the monetary union , which plays a pivotal role in the global economy. »  said Martinez: China is moving gradually to participate in a big way and directly in the decision - making of the IMF process.  national force  noted academic to be one of the factors that prompted the international Monetary Fund to expand its global currency reserves are enhanced national strength of China.  he explained the enhanced China 's national strength , including the global impact growing today is « as a result of its national conditions of strong and healthy and their purchasing power is very strong and sustainable development of its economy», as well as characterize China in many key areas such as science and technology, education and development, according to him.  He concluded Martinez saying: »there is a range of factors that drive China now to achieve this global presence, nothing more than the result of continued growth in the years  past».

[almostcajun]

UPDATE 1-China's yuan joins elite club of IMF reserve currencies

Friday September 30, 2016 22:30

(Adds China central bank statement, details on IMF fixing currency amounts)

BEIJING, Oct 1 (Reuters) - China's yuan joins the International Monetary Fund's basket of reserve currencies on Saturday in a milestone for the government's campaign for recognition as a global economic power.

The yuan joins the U.S. dollar, the euro, the yen and British pound in the IMF's special drawing rights (SDR) basket, which determines currencies that countries can receive as part of IMF loans. It marks the first time a new currency has been added since the euro was launched in 1999.

The IMF is adding the yuan, also known as the renminbi, or "people's money", on the same day that the Communist Party celebrates the founding of the People's Republic of China in 1949.

[Markinsa]

When you post a news article, please post the link to the article.

More detail below:

http://www.reuters.com/article/us-china-currency-imf-idUSKCN1212WC

 

 

 

.

[yota691]

IMF Launches New SDR Basket Including Chinese Renminbi, Determines New Currency Amounts

September 30, 2016

Today, the International Monetary Fund (IMF) announced the launch of the new Special Drawing Right (SDR) valuation basket including the Chinese renminbi (RMB), and the new currency amounts that will determine the value of the SDR during the new valuation period.

As approved by the Executive Board of the IMF on November 30, 2015, effective October 1, 2016, the RMB is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar, the euro, Japanese yen, and the British pound ( see Press Release No. 15/543). The Board also decided at that time that the weights of each currency would be 41.73 percent for the U.S. dollar, 30.93 percent for the Euro, 10.92 percent for the Chinese yuan, 8.33 percent for the Japanese yen, and 8.09 percent for the Pound sterling.

To mark the launch of the new SDR basket, Ms. Christine Lagarde, Managing Director of the IMF, stated: “The expansion of the SDR basket is an important and historic milestone for the SDR, the Fund, China and the international monetary system. It is a significant change for the Fund, because it is the first time since the adoption of the euro that a currency is added to the basket.

“The Renminbi’s inclusion reflects the progress made in reforming China’s monetary, foreign exchange, and financial systems, and acknowledges the advances made in liberalizing and improving the infrastructure of its financial markets. The continuation and deepening of these efforts, with appropriate safeguards, will bring about a more robust international monetary and financial system, which in turn will support the growth and stability of China and the global economy.

“This milestone also reflects the ongoing evolution of the global economy. The Fund plays an important role in this evolving process, and the inclusion of the Renminbi in the SDR basket shows once again that the Fund stands ready to adapt to change.”

In addition, the Board also decided today that effective October 1, 2016, the value of the SDR will be the sum of the values of the following amounts of each currency:

U.S. dollar	0.58252
Euro	0.38671
Chinese yuan	1.0174
Japanese yen	11.900
Pound sterling	0.085946

These currency amounts are calculated such that the value of the SDR in U.S. dollar terms is the same under the new basket as the value of the SDR prevailing today, and that, at the average exchange rates for the three-month period ending today (July 1 through September 30, 2016), the share of each currency in the value of the SDR corresponds to the weight approved by the IMF Executive Board on November 30, 2015.

The Board’s decision on the amount of each currency in the SDR valuation basket is the final step toward implementing the results of the latest review of the method of valuation of the SDR (see Press Release No. 15/543).

SDR interest rate

The SDR interest rate that will be determined on October 7 and applied for the week of October 10, 2016 will be the first one that reflects the new SDR valuation basket and includes a representative interest rate for the RMB. The change in the SDR interest rate relative to the previous week will reflect the changes in the composition and shares of currencies in the SDR valuation basket, as well as the changes in the interest rates on each component financial instrument.

[yota691]

Christine Lagarde on the significance of the Yuan's inclusion to the SDR

[yota691]

Under IMF decision, Yuan will join SDR

[yota691]

Historical milestone: IMF launches new SDR basket including China's RMB

[yota691]

REVIEW OF THE METHOD OF VALUATION OF THE SDR— AMENDMENT TO RULE O-1 Approved By Andrew Tweedie Prepared by the Finance Department (In consultation with the Legal Department) This paper seeks Executive Board approval of an amendment to Rule O-1, which specifies the currency amounts in the SDR valuation basket. In accordance with Decision No. 15891-(15/109), adopted November 30, 2015, as amended by Decision No. 16033-(16/71), adopted on July 20, 2016, on the method of valuation of the SDR, the amounts of each currency to be included in the SDR valuation basket, effective October 1, 2016, have been determined and are illustrated in Table 1, column 3. These currency amounts are calculated such that the value of the SDR in U.S. dollar terms is the same under the new basket as the value of the SDR prevailing today, and that, at the average exchange rates for the three-month period ending today (July 1 through September 30, 2016), the share of each currency in the value of the SDR corresponds to the weight approved by the IMF Executive Board on November 30, 2015. Table 1, column 9 shows that the shares of the currencies in the value of the SDR are in fact equivalent to the weights approved on November 30, 2015 VALUATION OF THE SDR - AMENDMENT TO RULE O-1 2 INTERNATIONAL MONETARY FUND Proposed Decision The following decision, which may be adopted by a majority of the votes cast, is proposed for adoption by the Executive Board: Effective October 1, 2016, Rule O-1, which specifies the amounts of the currencies in the SDR valuation basket, shall be amended to read as follows: “Rule O-1. The value of the SDR shall be the sum of the values of the following amounts of the following currencies: U.S. dollar 0.58252 Euro 0.38671 Chinese yuan 1.0174 Japanese yen 11.900 Pound sterling 0.085946”

[Synopsis]

From the above articles:

"The Board also decided at that time that the weights of each currency would be 41.73 percent for the U.S. dollar, 30.93 percent for the Euro, 10.92 percent for the Chinese yuan, 8.33 percent for the Japanese yen, and 8.09 percent for the Pound sterling."

And

In addition, the Board also decided today that effective October 1, 2016, the value of the SDR will be the sum of the values of the following amounts of each currency:

U.S. dollar              0.58252

Euro                       0.38671

Chinese yuan         1.0174

Japanese yen       11.900

Pound sterling         0.085946

These currency amounts are calculated such that the value of the SDR in U.S. dollar terms is the same under the new basket as the value of the SDR prevailing today, and that, at the average exchange rates for the three-month period ending today (July 1 through September 30, 2016), the share of each currency in the value of the SDR corresponds to the weight approved by the IMF Executive Board on November 30, 2015.

Here is a summary I put together:

14:00 CDT	IMF SDR	SDR	USD VS.	XE.COM USD
6-Oct-16	SHARE	VALUE	CURRENCY	VS. CURR
US Dollar (USD)	0.4173	0.58252
Euro (EUR)	0.3093	0.38671	0.895660	0.897528
Renminbi (CNY)	0.1092	1.01740	6.674314	6.670100
Yen (JPY)	0.0833	11.90000	102.338608	104.137000
Pound Sterling (GBP)	0.0809	0.08946	0.792169	0.793270
TOTAL	1.0000
USD/nonUSD Rate  =	nonUSD SDR Value/USD SDR Value*USD IMF SDR Share/nonUSD IMF SDR Share

 

Looks like nominal currency exchange rates can be determined from the IMF SDR Shares and SDR Values compared to the USD compared to values from www.xe.com.  Looks like the USD is still a world anchor currency.  Also, it looks like each SDR currency's SDR Value is changed quarterly and may look at each currency's past quarter's performance to determine each currency's SDR Value for the upcoming quarter.

Edited October 6, 2016 by Synopsis