Baku. 14 November. REPORT.AZ/ Chinese yuan prepares to enter the basket of Special Drawing Rights (SDR) of the International Monetary Fund (IMF).
Report informs, IMF Managing Director, Christine Lagarde recommended entry yuan in the SDR basket Friday.
The IMF experts have come to the conclusion that, the yuan is freely traded and widely used currency. IMF Executive Director supported by the expert, noting that the decision of the Chinese yuan would be taken at the next meeting of the IMF on November 30. The Chinese central bank has supported the decision of the IMF, saying it would continue reform of the financial system of the country.
IMF created the SDR in 1969. To date, the cost of a basket composed of the US dollar, pound sterling, yen and euro. As of March 17, 2015 204 billion SDR or about 280 billion US dollars have been created and distributed to Member States.
Research Group of Report News Agency notes that, after entering the yuan in the SDR will occur a necessary transition to a free-floating exchange rate. To date, the Chinese central bank maintains the yuan through intervention in the currency market. However, after November 30 there is a need in the market value of the yuan compared to other major world currencies. According to forecasts, the rate of CNY/USD could rise from its current level (6,35 CNY/USD) to 7-7,5 CNY/USD. This means the devaluation of the yuan. In this situation, the world economy may be exposed to serious adverse effects. Many countries, including China's neighboring states will be forced to carry out a devaluation of their national currencies.