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

IMF News, September 30, 2016

Source details

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

The International Monetary Fund (IMF) announced the launch of the new Special Drawing Right (SDR) valuation basket including the Chinese renminbi (RMB).
The Executive Board had approved on November 30, 2015 that the RMB is determined to be a freely usable currency and would be included in the SDR basket as a fifth currency, effective October 1, 2016.
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.

The SDR basket now comprises five currencies: U.S. dollar, euro, Chinese yuan (renminbi), Japanese yen, and Pound sterling.
Approved currency weights (as decided by the IMF Executive Board on November 30, 2015):
- U.S. dollar: 41.73 percent
- Euro: 30.93 percent
- Chinese yuan: 10.92 percent
- Japanese yen: 8.33 percent
- Pound sterling: 8.09 percent

The Board decided that 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 so 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.
- 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 weights approved on November 30, 2015.

Christine Lagarde 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.”
On the Renminbi’s inclusion she said: “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.”
She added: “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.”

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:
- Changes in the composition and shares of currencies in the SDR valuation basket.
- Changes in the interest rates on each component financial instrument.

Press Release No. 16/440 (September 30, 2016), International Monetary Fund.