RMB: What’s in store for the new reserve currency? – ANZ

FXStreet (Delhi) – Khoon Goh, Senior FX Strategist at ANZ, notes that the RMB has been admitted into the IMF’s SDR basket, effective from 1 October 2016, with a weighting of 10.92%.

Key Quotes

“But SDR inclusion does not mean there will be large inflows into RMB assets immediately.

While the authorities will prevent excessive movements in the currency, we expect them to allow the RMB to become more market determined.

With the RMB’s real effective exchange rate at elevated levels and yield differentials narrowing in favour of the USD, this should lead to further weakening in the RMB. We forecast USD/CNY to head towards 6.65 by the end of 2016.”

Khoon Goh, Senior FX Strategist at ANZ, notes that the RMB has been admitted into the IMF’s SDR basket, effective from 1 October 2016, with a weighting of 10.92%.

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