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Yuan Joins Dollar, Pound, Yen, Euro as Reserve Currency

  • Jim Randle

FILE - A picture illustration shows an arrangement of various world currencies including Chinese Yuan, US Dollar, Euro, British Pound.

FILE - A picture illustration shows an arrangement of various world currencies including Chinese Yuan, US Dollar, Euro, British Pound.

China's currency formally joins the U.S. dollar, the euro, the Japanese yen, and the British pound as a global reserve currency on October 1.

The International Monetary Fund will include the yuan, also known as the renminbi, in a "basket" of currencies that makes up the reserves that the IMF uses to help manage economic problems.

Analysts say China sought inclusion in the SDR basket as a recognition of its large and growing role in the global economy, and the decision to include the yuan was announced nearly a year ago.

Reserve currencies are supposed to be freely convertible. Experts quoted in the financial press say China is suspected of intervening in currency markets to manage its currency's exchange value.

U.S. Treasury Secretary Jack Lew says China has made enormous changes in the way its currency is traded in recent years, but economic reforms still have "a long way to go."

The basket of currencies will be made up of nearly 11 percent Chinese currency and almost 42 percent dollars.

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