RMB's Entry Into SDR Will Be More Valuable For Future Travel Or Exchange.

Yesterday morning, the market came as promised.

The good news that SDR has been formally incorporated into the IMF is that IMF has agreed to include the renminbi in the basket of SDR currencies, and the renminbi thus ranks among the world's five largest reserve currencies.

Recently, the vice president of the central bank and the director of the State Administration of foreign affairs, Yi Gang, said that the accession of the renminbi to the SDR indicates the IMF and the international community's recognition of China's monetary policy framework.

Experts say that although the RMB is included in the basket of currencies, it has symbolic significance.

The market does not have much direct impact, but this is the first time to add an additional currency into the SDR basket of currencies. The short-term impact on the RMB exchange rate should not be large, but the medium and long-term value will gradually become prominent.

In addition, the RMB's entry into the reserve currency ranks will provide support for China's and global economic growth and stability, especially the deepening of China's financial reform, and further widen the width and depth of China's financial market.

And the bond market.

SDR is the abbreviation of Special Drawing Rights, which means the right to exchange "freely available" currency.

It is a supplementary reserve asset created by IMF in 1969, and constitutes an international reserve with other reserve assets such as gold and foreign exchange.

IMF usually conducts a routine review of SDR every 5 years. The main content is the currency composition and weight of SDR currency basket.

The people's Bank of China issued a statement yesterday morning, welcoming the decision of the Executive Board of the International Monetary Fund (IMF) to introduce Renminbi into the basket of SDR currencies.

Washington time November 30th, the Executive Board of the International Monetary Fund decided to include RMB in the SDR basket, and the SDR basket expanded to 5 currencies, including the US dollar, the euro, the renminbi, the yen and the pound.

According to IMF, the new SDR currency basket came into effect in October 1, 2016.

The people's Bank of China stated that this is an affirmation of China's economic development and reform and opening up.

China's accession to the SDR will help enhance the representativeness and attractiveness of SDR, and improve the current international monetary system, which is a win-win outcome for China and the world.

The statement said that the RMB accession to the SDR also means that the international community has more expectations for China to play an active role in the international economic and financial arena. China will continue to unswervingly push forward the strategic plan for deepening the reform in an all-round way, accelerate the financial reform and open to the outside world, and make positive contributions to promoting global economic growth, maintaining global financial stability and improving global economic governance.

The basket has become the first developing country's basket currency.

The analysis indicates that this not only marks the international recognition of the status of the renminbi, but also means that the emerging market countries represented by China will participate more in promoting the development of the global monetary system and inject new vitality into world financial stability and economic development.

SDR is not "real gold and silver". It is only a kind of book assets allocated to Member States in IMF1969.

Although its actual pactions are not large, a currency "basket" is equivalent to its credit standing on the "international authoritative chapter".

The price of SDR per unit was determined by a basket of dollars, euros, pounds and yen.

Looking at the development of the world economy, too single monetary system has brought many unstable factors to the global economy. It has become a global consensus to establish a more diversified and balanced monetary system.

Whether it is relative IMF188 member countries or relatively wide range of global countries and regions, it is difficult to represent the four developed economies in terms of currency.

China is already the second largest economy in the world and one of the most open economies in the world.

As Lagarde, President of IMF, said, "the addition of RMB makes the SDR currency basket more diversified and more attractive."

On the one hand, it is conducive to the establishment of a more dynamic international monetary and financial system; on the other hand, a vibrant international monetary and financial system will also support the development and stability of China and the global economy.

In short, China and the world can achieve "win-win".

The renminbi has met the IMF's "free to use" standard and has become the second largest trade finance currency and the fourth largest payment currency in the world.

But generally speaking, the internationalization of RMB is still in its initial stage.

In the international cross-border revenue and expenditure, the proportion of RMB is only about 2.8%, and there is still a lot of distance from "no need to exchange all over the world".

Experts said that on the one hand, China should rely on its steady development to create the core of the Renminbi; on the other hand, it should also steadily push ahead with financial reform and opening to the outside world, attracting more investors to hold renminbi assets and making the renminbi a "hard currency" widely welcomed by the world.

Recently, IMF announced that the Renminbi should be included in SDR, and its weight was eventually set at 10.92%, lower than expected.

In the preliminary assessment report of July this year, IMF staff estimated that the weight of RMB would be 14%~16%.

Affected by this, the US dollar index fell from high. The euro, yen, Australian dollar and other currencies began to rise collectively against the US dollar in early trading yesterday. The Australian dollar rose more than 0.7%, the yen rose 0.3%, the pound rose nearly 0.3%, and the euro rose 0.2%.

Recently, the RMB exchange rate has been calm.

At the close, the offshore renminbi was basically flat against the US dollar at 6.3986 yuan, while the central parity of RMB was more than 3 months low because of the strong international dollar.

Analysts pointed out that the foreign exchange market basically digested the RMB "basket" good, the exchange rate trend is still stable.

Experts said that although the direct impact of RMB "basket" on people's lives in the short term is limited, but as SDR promotes the international recognition of RMB and enhances the level of free use of RMB, enterprises and people will enjoy substantial benefits in terms of investment and consumption.

"With the central bank as the reserve assets, the market will also increase the allocation of RMB assets and eventually convert into Renminbi stocks, bonds, financial management, deposits and so on, which is undoubtedly good for China's financial market."

Shao Yu, chief economist of Orient Securities, said: "for ordinary people, RMB assets will be more valuable because of rising demand."

Experts generally believe that the RMB can not change the international monetary pattern immediately after its accession to the SDR, but it will increase the willingness of international institutions to hold more renminbi assets.

In the short term, the recognition and confidence of RMB in the international market is enhanced. Under the strong background of US dollar rate hike, it will help the Chinese people to become stronger and reduce their worries about their "pocketbook" shrinking.

Li Jing, managing director of JP Morgan and vice chairman of the Asia Pacific region, said: "some people worry that RMB will depreciate immediately after joining the SDR. This is a misreading.

At present, the RMB exchange rate has gradually returned to the level of marketization, and there is no basis for substantial depreciation.

Domestic investors need not worry too much. "

In addition, Yi Gang said that after the RMB joined the SDR, it would be more convenient for individuals to travel and study abroad and use Renminbi in the future. For entrepreneurs, it would be more convenient for them to invest in RMB.

Huang Jingru, executive deputy general manager of the outbound tourism headquarters of Guangzhou travel, said that at present, Chinese tourists travel abroad not only to exchange rates before the departure date, but also to make an appointment for bank exchange. After returning to China, many tourists have to convert the remaining foreign currency into Renminbi, which not only has exchange rate losses, but also has complicated operation steps, which adds to the cost of travel.

"The International Monetary Fund has announced that the RMB will join the SDR. In the next 1 years, except for the possibility of direct use of RMB in Southeast Asia, it is unlikely that other regions will use Renminbi directly. In the long run, as more and more countries recognize RMB, they are willing to accept Renminbi or carry out various pactions in Renminbi. In the future, tourists do not need to exchange foreign currencies to travel around the world.

Huang Jingru said.

Huang Jingru said that with the increasing proportion of RMB payment in international pactions, the citizens who participate in overseas tour groups are also expected to benefit indirectly from the "basket" of RMB.

When the currency used by the group and the overseas settlement company can be used, the exchange rate risk and exchange cost are reduced, and the initiative of exchange rate risk control is in the hands of the group and consumers.

The head of the Guangdong branch of the China International Travel Service believes that there is still a period of time for the RMB to enter the basket and it is difficult to see the impact on the entry and exit tours for the time being.

He believes that the main factor affecting outbound travel is the appreciation and depreciation of the renminbi.