Thailand to gain from IMF's yuan move

[webfact]

RESERVE CURRENCY
Thailand to gain from IMF's yuan move
Business reporters
The Nation

BANGKOK: -- Thailand is expected to gain from more international trade and investment as a result of the wider use of the yuan after the International Monetary Fund's inclusion of the Chinese currency in its SDR (special drawing rights) basket, according to a senior Bank of Thailand official.

Mathee Supapongse, deputy governor of the central bank, said the yuan was now one of the world's five major currencies for the IMF's SDR. This will boost the unit's role in international trade and investment, resulting in its wider international acceptance.

The BOT has gradually invested in yuan-denominated-bonds for diversification of international-reserve management while promoting the Chinese currency as an alternative for payment since 2010, he said. In addition, the BOT extended a bilateral swap arrangement worth 70 billion yuan (about Bt390 billion) with China, which appointed Industrial and Commercial Bank of China (Thai) as a clearing bank in Thailand.

He said the yuan would gain popularity as an international unit for investment after China's relaxation of capital controls, while investors might need to readjust their investment portfolio and the hedge for SDR on a gradual basis.

The yuan's inclusion in the SDR basket is positive for Thailand since China is the country's largest trading partner, according to the Commerce Ministry.

Chutima Boonyapraphasara, permanent secretary of the ministry, said the move should facilitate more trade growth between Thailand and China, with China-bound Thai exports accounting for 11 per cent of the Kingdom's total export value.

"Traders would shift to use more Chinese yuan, as they will not have to pay for foreign-exchange fees converting into the US dollar or other currencies," she said.

Nopporn Thepsithar, president of the Thai National Shippers Council, said some traders who do a lot of business with China might negotiate with their trading partners to use the yuan in the near future.

The yuan internationalisation will help guarantee that it plays a more significant role in global trade and investment, he said.

On Monday, the IMF completed its five-yearly review of the basket of currencies that make up the SDR and included the Chinese unit as one of the five currencies for the first time after concluding that it met all existing criteria.

The yuan will represent 10.92 per cent of the SDR basket, while the US dollar's weight is reduced from 41.90 per cent to 41.73 per cent; the euro's weight from 37.40 per cent to 30.93 per cent; the Japanese yen from 9.4 per cent to 8.33 per cent; and the British pound from 11.30 per cent to 8.09 per cent.

Market consensus continues to see the yuan weakening further next year to 6.6 per US dollar to reflect economic fundamentals, according to Kasikornbank.

Fitch Ratings said the inclusion of the yuan in the SDR currency basket would have no immediate significant effect on the sovereign credit profile.

IMF chief Christine Lagarde called the decision "an important milestone in the integration of the Chinese economy into the global financial system".

The IMF's "currency basket" is a weighted daily average of the market exchange rates of the top currencies, which is more stable than any of the individual major currencies alone. The average is used as a measure of value for the IMF's "special drawing rights," which quantify how much reserve currency each of the 188 member countries can call on.

Lagarde also called the vote a recognition of the progress that the Chinese authorities have made in the past years in reforming China's monetary and financial systems, according to Deutsche Presse-Agentur.

Source: http://www.nationmultimedia.com/business/Thailand-to-gain-from-IMFs-yuan-move-30274112.html


-- The Nation 2015-12-02

[ronwparker]

Wishful thinking?!

[Srikcir]

Inclusion of the yuan in the "basket" is a success for IMF, the USA and the rest of the world (except for BRIC seeking its own currency basket).

Being part of the IMF basket makes it more difficult for China to pursue any significant currency manipulation - a customized national currency policy that would maintain a high yuan internationally while keeping a cheap yuan domestically.

With the USA and euro dollars still accounting for about 73% of the basket, market movement of the yuan will have far less volitility on the world economies than it has in the immediate past. That will provide more predictability in the yuan value and smooth international transactions for China and its trade partners.

Welcome to the party China.

[IMA_FARANG]

From what he seems to be saying is that having Chinese Yuan more readily available this will aid the Thai Baht.

I don't buy that at all, why should a person seeking a Chinese Yuan investment opportunity have any thing to do with the Thai Baht at all.

Just stop messing around an go straight for the Chinese Yuan and the H_ll with the Baht nonsense.

[IMA_FARANG]

Inclusion of the yuan in the "basket" is a success for IMF, the USA and the rest of the world (except for BRIC seeking its own currency basket).

Being part of the IMF basket makes it more difficult for China to pursue any significant currency manipulation - a customized national currency policy that would maintain a high yuan internationally while keeping a cheap yuan domestically.

With the USA and euro dollars still accounting for about 73% of the basket, market movement of the yuan will have far less volitility on the world economies than it has in the immediate past. That will provide more predictability in the yuan value and smooth international transactions for China and its trade partners.

Welcome to the party China.

-------------------------------

Interestingly the "loser" in the basket and each currencies "weight" seems to have been the Euro as it lost relative influence as the pound and dollar did not.

[Olgab]

Inclusion of the yuan in the "basket" is a success for IMF, the USA and the rest of the world (except for BRIC seeking its own currency basket).

IMF IS A WORST USURER BRIGAD

Being part of the IMF basket makes it more difficult for China to pursue any significant currency manipulation - a customized national currency policy that would maintain a high yuan internationally while keeping a cheap yuan domestically.

With the USA and euro dollars still accounting for about 73% of the basket, market movement of the yuan will have far less volitility on the world economies than it has in the immediate past. That will provide more predictability in the yuan value and smooth international transactions for China and its trade partners.

Welcome to the party China.

[Olgab]

Inclusion of the yuan in the "basket" is a success for IMF, the USA and the rest of the world (except for BRIC seeking its own currency basket).

IMF IS A WORST USURER BRIGAD

Being part of the IMF basket makes it more difficult for China to pursue any significant currency manipulation - a customized national currency policy that would maintain a high yuan internationally while keeping a cheap yuan domestically.

With the USA and euro dollars still accounting for about 73% of the basket, market movement of the yuan will have far less volitility on the world economies than it has in the immediate past. That will provide more predictability in the yuan value and smooth international transactions for China and its trade partners.

Welcome to the party China.

[Siamwhiteelephant]

Aww ....! Thailand will be happy then. She’ll get to spend her new bf’s yuan soon: “… some traders who do a lot of business with China might negotiate with their trading partners to use the yuan in the near future”

[Pib]

Just as FYI below snapshot from a very recent CNBC news article shows the current and new/near future makeup of the IMF SDR reserve currency basket. In terms of share loss the Euro will lose a big share of the pie. The pound and yen incur significant share loss also. The USD will lose very little. Don't have a clue if the new makeup of the SDR basket once it's fully implemented in late 2016 will make any difference in exchange rates.

http://www.cnbc.com/2015/12/02/who-loses-when-the-renminbi-joins-the-imf-basket.html