The IMF′s decision to add China′s yuan
to its elite basket of reserve currencies. What happens to the Renminbi now and what
does this mean to Korea? The Chinese currency becoming part of the
Special Drawing Rights our Beyond the Headlines tonight… Hwang Ji-hye is live in the studio
with me. Ji-hye, the yuan′s ascent to the IMF′s
reserve currency basket… this is not something unexpected… we all knew this would happen
eventually… but Ji-hye, why now? Of course it′s China′s ever faster rising
footing on the global financial stage, not to mention its economic size.
Almost three percent of all international settlements are done with the yuan,… while
the rate was in the zero percent range five years ago.
The figure is now even higher than that of Japan′s,… allowing the Chinese currency
to stand as the fourth most fequently used currency in the world.
China′s GDP that was about the same with Japan in 2010… grew fast… to outpace that
of Japan′s in 2013… and become the world′s second-largest economy.
Back in 2010 during the IMF′s last review of the composition of the currency basket,…
the international body rejected the yuan to be included in its Special Drawing Rights
or SDR′s currency composition,… saying it did not meet necessary criteria.
The decision is a key milestone in the yuan becoming an international currency.
I′m sure the Chinese government must behave differently now that its currency has been
confirmed as a freely usable currency. The Chinese currency being prized with the
IMF′s reserve asset status does NOT mean it′s directly becoming a safe-haven asset.
And to become such asset… like the U.S. dollar,… what many experts agree on…
is that the Chinese government has to be committed to a freer yuan… and pour efforts in making
their policies predictable and transparent. While whether the government will actually
go through that process is uncertain… and something that we have to keep an eye on,…
for now… it pledged… to keep the yuan stable. ″We completely have the ability to maintain
renminbi exchange rate stability at a reasonable and balanced level. Will the renminbi exchange
rate devalue after joining the SDR? I think such concerns are unnecessary.″
The elevated status of the yuan is not only symbolic but quite important for Korea as
well as it brings Korea a step closer to emerging as an international hub for offshore yuan
transactions. One year ago, Korea launched a won-yuan
direct trading market. But, not only that Ji-hye… tell us why
the IMF′s decision this time should matter to Korea.
The yuan′s inclusion, in the long term, is a factor that will strengthen the currency.
And… with that… experts say… Korea will be able to maximize the benefits coming from
the bilateral free trade deal with China. ″A stronger yuan means the purchasing power
of the Chinese will rise. That′s an opportunity for local exporters benefiting from the Korea-China
FTA. More Chi