Business / Economy

Inclusion of China's RMB into SDR basket great news for Latin America: economist

(Xinhua) Updated: 2015-12-01 11:01

BUENOS AIRES - The IMF's decision to include China's currency, the renminbi, into its Special Drawing Rights (SDR) basket is good news for Latin America, an Argentine economist said on Monday.

"The currency of China, which is a strategic partner of many countries on our continent, will begin to circulate globally as much as the US dollar and the euro," said Gabriel Holand in an article in Argentina's economic daily BAE.

The IMF board, which represents the fund's 188 member countries, decided that the renminbi "met all existing criteria," the IMF said in a statement after completing the regular five-yearly review of the SDR basket.

Effective from Oct 1, 2016, the renminbi, or the Chinese yuan, will be included in the SDR basket as a fifth currency, along with the US dollar, the euro, the Japanese yen and the British pound.

According to Holand, these four currencies "command the global economy...and the next invitation naturally belongs to China."

The renminbi's inclusion in the IMF's SDR basket of currencies allows central banks to use it as a reserve, he said, adding that this would be very important for Latin America.

"The relative weight of the Chinese currency will continue to grow in global finance and trade ... This is good news as this competition will bring opportunities to those who can seize them intelligently," said Holand.

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