Imf greenlights addition of chinese yuan to sdr basket wall street responds zero hedge aud convert usd


If the yuan’s addition wins 70 percent or more of IMF board votes, it will be the first time the number of currencies in the SDR basket – which determines the composition of loans made to countries such as Greece – has been expanded."

I would say that the likelihood of China’s yuan joining the IMF currency basket this year is very high," said Hong Kong-based Shen Jianguang, chief economist at Mizuho Securities Asia.

"The only thing that could deter this is if the U.S. led a group rejecting the yuan’s inclusion, which could complicate things hkd to usd exchange rate history. But the United States’ current official stance doesn’t reflect such an attitude," he said.

Unless something dramatically changes in the next three weeks, of course, although that seems unlikely: moments ago Bloomberg reported that Treasury Secretary Lew met with Chinese Vice Premier Wang Yang and Finance Minister Lou Jiwei on the sidelines of the G-20 Leaders Summit in Antalya, Turkey, according to readout sent via e-mail by U.S.

Treasury, where “Secretary Lew reiterated that the United States intends to support the Renminbi’s inclusion in the Special Drawing Rights basket provided the currency meets the International Monetary Fund’s existing criteria."

The executive board, which represents the Fund’s 188 members, is seen as unlikely to go against a staff recommendation and countries including France and Britain have already pledged their support for the change. This would take effect in October 2016, during China’s leadership of the Group of 20 bloc of advanced and emerging economies.

As Reuters further adds, joining the Special Drawing Rights (SDR) basket would be a victory for Beijing, which has campaigned hard for the move, and could increase demand for the yuan among reserve managers as well as marking a symbolic coming of age for the world’s second-largest economy. In an ironic twist,, while the IMF has historically delayed the moment of acceptance, it caved just months after China officially devalued its currency for the first time in decades to stimulate its exports, and has unleashed an unprecedented campaign (using overt and covert means) to stabilize the Yuan as capital outflows in the past several months have soared.

Reuters is likewise amused by this hypocrisy: "China’s heavy-handed intervention to stem a stock market rout over the summer, and an unexpected devaluation of the yuan in August, had raised some doubts about Beijing’s commitment to reforms."

Unless, of course, the whole facade of "reform" is just an epic smokescreen and what the IMF is truly rewarding is gross market manipulation and currency warfare, such as what all developed nations have engaged in since the great financial crisis.

Singapore-based Commerzbank economist Zhou Hao said China needs to further accelerate domestic reforms and improve policy transparency. "The PBOC should reduce the frequency of market intervention, allowing market forces to really play a critical role."

No matter what the real reasons behind the historic development, IMF said its staff had found the yuan met the criteria of being “freely usable,” or widely used for international transactions and widely traded in major foreign exchange markets, Lagarde said. “ I support the staff’s findings," she said in a statement immediately welcomed by China’s central bank, which said it hoped the international community would also back the yuan’s inclusion.

Still, even if formally accepted, few if any reserve managers will rush out to buy Yuan: China’s extensive capital controls mean it would take a while before the yuan rivals the dollar’s dominant role in international trade and finance, analysts say.

Its closed capital account still limits foreigners from buying yuan-denominated assets and places caps on how much cash residents can take out of the country. These restrictions, along with concerns that the yuan is set to come under steady depreciation pressure, may cause corporates to back off from holding yuan.

While none of the currencies globally are viable under the current debt based monetary system but there is no viable solution yet on how to make people around the world use something/anything as a medium of exchange that is divisible and ‘trusted’ and is ‘legal tender’.

We must remember that EUR was just born in 1997 and implemented in electronic form in 1998 and from Jan 1999 it became legal tender in currency notes form.

Here is the IMF circular when EUR was added to SDR effective Jan 1999. IMF Incorporates the Euro into the SDR Valuation and Interest Rate Baskets

It is my view that China will keep rising, and IMF’s SDR inclusion is just paving the way forward and strengthening the currency today’s conversion rate usd to inr. As US loses it’s grip on the global monetary system, it is hard for the American Govt hegemons to accept it thus China had to wait until now. If it was me, Chinese yuan would have been in IMF SDR about a decade ago when the manufacturing prowess of China was at it’s peak.

We shall have many crises in the years ahead but inclusion of Chinese Yuan in the IMF led SDR basket which is the monetary system AS ON DATE will not make it any worse but slightly better because this will bring stability.

Global trade and spneding is increasingly being done in yuan and most goods are made in China whether we like it or not, and hence all the 210 countries need to have yuan available in their banking systems in order to continue trading with China.

In fact, this will make things slightly cheaper because globally, the wholesalers will not need to price in the FX fluctuations which they currently do when remitting to China.

Screw the big G-7 banks, they always have an agenda of their own survival. Usually they always lie and most analycysts are a pain in the butt anyways.

I am waiting for the day within the next few months when Saudi (post OPEC break up?) will announce acceptance of yuan for oil which will be the last day of the connection between the world’s USD based monetary system as we know it and the new monetary system where Yuan will rule the roost over the next few decades.

Every single day, oil remains below USD 50-60 level, the neeed for the world’s top 10 oil producers rises more and more and they are choking by this USD based system especially when US is no longer the world’s top oil importer…….Why are the Chinese forced to pay in USD when they can simply use CNH….hence Chinese have stopped buying from Saudi and Saudi exports of oil to China have dropped 35% over the last decade…..

Same for India or any other major oil importer, if they buy oil in USD, it makes things that much more expensive due to exchange rates. The day the exporters move away from USD, they have to go closer to CNH being their largest importer of oil which is why inclusion of CNH in IMF’s SDR is very important step for China who have got this approval to occur on Nov 30 this year instead of the date announced by IMF a few weeks ago of Oct 2016 for which in all likelihood, US was involved in pushing the day further.

We should hear the news on Dec 1 when the CNH will be included in IMF’s SDR and this will be a major game changer because all Govt’s will need to hold trillions in CNH in order to assist their domestic banks/importers to pay China in yuan.

Saudis are Not YET willing to accept yuan but several meetings have been held in Moscow along with Jordan, UAE, Egypt, China and Russia to discuss oil as well as Syria. Hence, the time is coming….

Saudi’s holding capacity is diminishing every single day because of the expensive wars, largesse spending, weak oil and US not being their friend anymore (else why would Saudi visit Moscow, give 16 nuclear reactor order to Moscow and give USD 10bn to Moscow in cash to invest anywehere?) the boxer rebellion band. US does not buy much oil from no one least from Saudi except the long term contracts. Oil imports from Saudi by US have also declined more than 35% and will continue to drop. Military bases have been shut among other things.

Countries like Russia have started accepting yuan for oil aud in usd. LME in UK accepts yuan. Gazprom in Russia accepts yuan. Malaysia accepts yuan. Iran accepts yuan…….Angola accepts yuan for oil and has also made yuan it’s legal tender as has Zimbabwe made yuan it’s ;legal tender.

Saudis have sold their cash, US treasury holdings and now also their equity holdings which are all public news. Hence, bulk of their liquid assets are gone and now the more illiquid assets will need to be sold or taxes implemented or country will be opened up or bonds will be issued gender identity quiz. All this will cause country ratings to be reduced and reserves to continue to diminish at a very rapid pace. Saudi was downgraded to A rating about 2 weeks ago and all their 8 banks were downgraded as well last week. This will continue until they prop up their income as well as reduce their expenses.

So, this opinion of the biased western analcysts/ever controlling Govts propagated through media as well as Western banks is completely biased and completely opposite of reality.

Yuan is already floating freely as much as EUR and JPY are floating freely. To suggest that EUR and JPY are not being controlled by their Govts or for that matter any currency anywhere in the world backed by QE, bank manipulation and central bank nonsense in full public view, then I don’t have much to say.

USD was a strong currency when it’s manufacturing base was strong which is the period from 1900 to 1980. They built railroads, infra, steel plants, banks, gave foreign aid, were morally storng etc global market futures. However, since 1980 ever since the Reagan era, unlike UK’s Thatcher era, money started being spent for no reason and the US Govt debt mushroomed from below USD 1 trillion to USD 19 trillion and perhaps it is running at USD 65 trilion or whatever nonsense there is.

Since 1980, USA lost it’s mojo but was still ok until 9/11 occured and that was the pinnacle of the US empire and the empire has lost control of itself since then.

Ever since 9/11, money was looted, not spent, by whoever could i.e. bankers, MIC, guns, police, surveillance etc because the writing has been on the wall.

Look at where the cuts in th US were. At the space program, at most R&D whether medical or anything else, education, healthcare, infra etc. Even jobs got cut badly and sent overseas in some sort of a rushed manner.

USD would have remained strong if it was not for it’s hegemony and giddy ideas of control in all it’s senses over the rest of the 7.1 billion people.

Now US economic system cannot stop falling and the world is here to watch and is collaborating against the demise of the US empire. It is not sad because US called this upon itself usd to zar chart. Instead of an adversarial approach, US could have chosen the path of least resistance but they used their military everywhere and incidents like Paris, refugee crisis, bans of goods by Russia on Europe, Middle East wars, oil price volatility are the reason why all of us public are paying the price of this lost empire trying to find a grip before slipping away into the annals of history.

This shows how encompassing the US control over the whole world is and was and they could easily hurt any economy of their choice and send inflation to others till the time others have a need for USD.

Meanwhile, I have never seen anyone from Saudi say that they are not convinced of the yuan. Every country in the Middle East and the world over is embracing the yuan. 60 counties already hold yuan in their reserves and over 50 have signed swap agreements and have actually used them in the last 4-5 years oil futures market. Big exception being USA. USA has not been allowed to have a yuan clearing centre nor any bonds have been issued or listed in USA etc. All this glory is for Europe, Middle East, Asia, Latam, Russia, etc. Everyone but the USA.

Saudis don’t have a choice future marketing trends 2015. Either they keep withering away while procrastinating over acceptance of yuan or they choose to accept it immediately and have a better life immediately.

Choice is completely in the hands of oil producers and Saudis themselves. They are being stopped only by themselves and their wishful thinking of the past and their own non willingness to embrace the future. And of course, the ramifications of the decision are immense and US will become a bitter enemy (just like an ex wife) of Saudi!

We have created factories at a speed of an average USD 100bn for the last 30 years which is about USD 3 trillion of OUR factories inside China. China has played it’s cards very well and created a very stable economic system which is rising at a rapid clip regardless of what anyone’s views may be.

The model of China is similar to America. US created factories since 1900 until the 1990’s and was a strong power. Once the factories stopped being built, US lost it’s mojo and the results are for all to see.

This news should be absolutely no surprise. Recently the IMF had been broadcasting the same stuff as the Chinese euro dollar exchange rate forecast 2016. USofA was making no IMF payments, China will make IMF payments. After the decision not to include CNY in IMF basket, China racked the markets for the month. Then various forecasters all said it would happen…

Whether you like China or not, they are the only economy with healthy income and production right now of finished goods, and any kind of economy needs both income as well as spending.