THE International Monetary Fund (IMF) has increased the weighting of the Chinese yuan in its review of the currencies that make up the valuation of its Special Drawing Rights (SDR), an international reserve asset.

The IMF raised the yuan’s weighting to 12.28% from 10.92% in its first regular review of the SDR evaluation since the Chinese currency, also known as the renminbi, was included in the basket of currencies in 2016, the People’s Bank of China said in a statement yesterday.

The IMF also raised the U.S. currency’s weighting to 43.38% from 41.73%. The euro’s weighting declined to 29.31% from 30.93%, the yen’s fell to 7.59% from 8.33% and the British pound fell to 7.44% from 8.09%.

The new SDR basket will come into effect Aug. 1 this year and the next review will be in 2027, according to the People’s Bank of China.

The SDR is an international reserve asset supplementing members’ official reserves, which can be exchanged among governments for freely usable currencies in times of need.

In 2016, the IMF included the yuan in its SDR basket as a fifth currency, along with the U.S. dollar, the euro, the Japanese yen and the British pound, a milestone in China’s efforts to internationalize its currency.

At present, the Chinese yuan ranks third in terms of the weight in the SDR basket, after the U.S. dollar and the euro.

The IMF said in a statement Saturday that its executive board had determined the weighting based on trade and financial market developments from 2017 to 2021.

Although the yuan’s value has declined recently, it has risen roughly 2% against the dollar since 2016, and appreciated about 6% against its major trading partners.

The People’s Bank of China said in its statement that China will continue to promote the reform and opening of its financial market.

(SD-Agencies)