China’s yuan takes leap towards joining IMF basket

China’s yuan moved closer to joining other top global currencies in the International Monetary Fund’s benchmark foreign exchange basket on Friday after Fund staff and IMF chief Christine Lagarde gave the move the thumbs up.

The recommendation paves the way for the Fund’s executive board, which has the final say, to place the yuan on a par with the US dollar, Japanese yen, British pound and euro at a meeting scheduled for November 30.

Joining the Special Drawing Rights (SDR) basket would be a victory for Beijing, which has campaigned hard for the move, and could increase demand for the yuan among reserve managers as well as marking a symbolic coming of age for the world’s second-largest economy.

Staff had found the yuan, also known as the renminbi (RMB), met the criteria of being “freely usable,” or widely used for international transactions and widely traded in major foreign exchange markets, Lagarde said.