In the news: RMB enters IMF basket, GSK pays the SEC a $20M fine, the Belt and Road gets a boost and Didi snaps back at local driving rules
October 11, 2016 | BY
Katherine Jo &clp articlesThe renminbi achieved global reserve status, GlaxoSmithKline settled China bribery charges, the PBOC pushed for more currency clearing houses and three major cities drafted restrictive ride-sharing regulations
The renminbi officially achieved global reserve currency status last Saturday, a milestone seen breathing life into China's bond markets by prompting estimated inflows of as much as $1 trillion over the next five years. Its entry into the International Monetary Fund (IMF)'s Special Drawing Rights (SDR), alongside the U.S. dollar, euro, British pound and Japanese yen, comes as China aims to boost the currency's usage worldwide and works to provide an alternative to the greenback. Now that the IMF inclusion is over and done with, China has allowed the renminbi to decline past the key level of 6.7 to the dollar as the dollar advances. This, while negative for the currency in the short-term, does show that policy makers are not holding on to specific marks and will probably focus more on controlling excessive volatility. That isn't to say that the market has become totally predictable: China can and will enforce its authority, especially when things don't go its way, SDR entry or not.
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