Economist spotlights China's efforts for RMB inclusion in SDR

There is a high chance of RMB inclusion in the IMF Special Drawing Right(SDR) basket, J.P. Morgan economist Zhu Haibin said. [Photo/IC]

BEIJING -- There is a high chance of RMB inclusion in the IMF Special Drawing Right (SDR) basket, J.P. Morgan economist Zhu Haibin has said, highlighting China's conspicuous efforts.

"The IMF will probably be supportive of RMB's inclusion in the SDR as its board will hold a meeting to review the relevant issue on Nov 4," said Zhu in a report.

But the IMF decision might not be published soon, according to Zhu.

Zhu attributed his opinion to China's recent reforms to support the renminbi's bid for inclusion in the IMF SDR basket.

"Over the past months, China has continued to push ahead with capital account liberalization and the internationalization of RMB," said zhu in the report.

The People's Bank of China (PBOC), China's central bank, announced last Saturday the removal of the deposit rate ceiling, marking the completion of interest rate liberalization, Zhu said.

To promote London as an offshore RMB center, the PBoC has extended on Oct 20 an agreement on a reciprocal currency swap scheme with the Bank of England. The maximum value of swap was expanded from 200 billion yuan ($31.5 billion) to 350 billion yuan, valid for three years and can be further extended when agreed.

Meanwhile, the PBOC also issued its first offshore RMB note in London. The note is worth 5 billion yuan at an interest rate of 3.1 percent, and falls due in 2016. London is already a top RMB trading center outside China.

The PBOC opened the onshore inter-bank FX market to foreign central banks, sovereign wealth funds and multilateral financial institutions on September 30 to address the technical issue on the ability to hedging RMB-denominated exposures, according to the report.