CNY likely to be included in the SDR basket

SDR basket valuation method would be reviwed by IMF every five years to ensure that it reflects the relative importance of major currencies in the world's trading and financial systems and have been determined by the Fund to be "freely usable."

For China to be qualified into the inclusion, its export of goods and services over five years time period should be of largest value, which was met back in 2010. China's exports averaged 535.14 USD Hundred Million from 1983 until 2015, reaching all time high of 2275.13 USD Hundred Million in December of 2014 and record low of 13 USD Hundred Million in January of 1984.

Chinese renminbi (RMB) is the only currency not currently in the SDR basket which meets the export criteria, as it awaited to meet the freely usable criteria. Hence, whether the RMB also meets the freely usable criterion would be focused in order to be included in the SDR basket.

"China met the export criterion already in 2010 but not the freely usable criterion. A freely usable currency is defined by the IMF to be widely used to make payments for international transactions and to be widely traded in the major exchange markets. In other words, the currency is not strictly required to be a fully convertible currency", says Nordea Bank.

China's latest financial liberalisation moves, including adopting a market-based currency fixing rate and removing the deposit rate ceiling, demonstrate Beijing's determination to be included in the SDR basket.