As China is expected to be included in the IMF SDR basket this week a rather large question has appeared in the MSM, will it rise or fall. David Uren sees a fall:
The PBOC vice-governor Yi Gang commented last week that the currency would remain stable after its inclusion in the IMF basket, implying that the central bank is prepared to intervene to make sure that is the case.
However, the yuan’s new status as a global currency implies greater market determination of the currency’s value, and this is consistent with other moves by the Chinese authorities, including liberalisation of capital controls and the widening of the maximum daily trading band.