Significance and Challenge of RMB’s Inclusion in the SDR Basket

Domestic and foreign markets believe that the relatively stable RMB is entirely the consequence of many interventions by China’s central bank for the sake of the inclusion of the RMB in the SDR basket. If China’s economic growth is still under a big downward pressure and the bank further imposes an easy monetary policy, the RMB will go through an increasing pressure of depreciation. Therefore, the inclusion of China’s currency in the SDR basket is a double-edge sword, and its significance and impact, particularly within the short term, should not be overestimated.

Yi Xianrong, Researcher, Chinese Academy of Social Sciences via CHINA US Focus http://ift.tt/1INP5mR