Beijing, Nov 23 (IANS) The possible entry of the yuan in the International Monetary Fund’s (IMF) basket of currencies will not affect the stability of the Chinese currency, a top official said on Monday.
Deputy Governor of the People’s Bank of China (PBOC) Yi Gang said the yuan “will remain basically stable at a reasonable and balanced level”, EFE news reported.
Some financial experts have speculated in recent weeks about the possibility of Chinese authorities devaluing the yuan if the currency becomes part of the Special Drawing Rights (SDR) basket or the nominal currency of IMF, to promote Chinese exports.
However, Yi refuted these predictions and said the world’s second-largest economy wants to have more prominence within the international financial institutions to “contribute” to an established order.
Yi added China is set to become the largest creditor in the world and so must rely on the existing system.
“We want a louder voice for developing countries and emerging markets in the existing system, but this doesn’t mean that we want to destroy or overthrow it,” said Yi.
The likely inclusion of yuan among currencies that make up the SDR (US dollar, euro, pound sterling and the Japanese yen) is endorsed by IMF experts, who gave their approval on November 13.
PBOC reformed the yuan exchange-rate system in August, adopted an “exceptional” currency devaluation, which lasted three days, a decision that caused great concern among investors and governments worldwide.
Since then the reference exchange rate has registered small daily fluctuations and has remained broadly stable against the dollar, while against the euro it has regained its level before the devaluation.