Interview

Expert: Inclusion of Chinese Yuan in List of World's Reserve Currency Could Lead to Increase in Volume of Payments in This Currency"

24 december 2015

The Chinese yuan entered the basket of reserve currencies of the International Monetary Fund, together with the US dollar, the euro, the British pound sterling and the Japanese yen. The yuan will take a share of 11% of the basket. This is more than the shares of the British pound and the Japanese yen.

In the interview for the portal ORTCOM.KZ, the analyst of the Group of Companies FOREX CLUB Valery Polkhovsky spoke about the impact that this decision will have on the global economy, as well as whether it bears any consequences for Kazakhstan.

“All depends for what time we evaluate the consequences. If in the short-term, China and Kazakhstan will have no substantial dividends from this decision. But in the longer term there are a number of advantages for China. First of all, it is the official recognition of the yuan as a world currency, which can claim the status of reserve. For Kazakhstan it will be expressed in the growth of the volume of payments in the Chinese currency,” said the expert.

Also, the speaker paid attention to the fact that the share of the yuan in the global basket of currencies is not high. However, if the amount of payments in it is growing from year to year, then the share will be revised upward.

“Now it will be easier for China to issue debt obligations in its currency and they will have much greater demand. However, the currency must be freely convertible, for this it needs market exchange rate formation. Therefore, China will have to get used to living with a flexible rate, and thus it will be more difficult to obtain a competitive advantage. Also, the possibilities to conduct monetary policy will be narrowed - now it should be more market,” said Valeriy Polkhovsky.

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