China's Yuan to Gain More Influence... Foreign Exchange Reserves Share at 2.88%

Chinese Media Reflect Confidence in China's Economy
China Encouraged by Yuan Internationalization

[Asia Economy Beijing=Special Correspondent Jo Young-shin] The share of the Chinese yuan in the foreign exchange reserves of countries worldwide has increased to 2.88%.

[Image source=Yonhap News]

Chinese media including People’s Daily Online cited the International Monetary Fund (IMF) data on the currency composition of foreign exchange reserves (COFER) and reported on the 4th that the yuan's share in global foreign exchange reserves in the first quarter rose by 0.09 percentage points from 2.79% at the end of last year to 2.88%. This is the highest level since the yuan was included in COFER in 2016.

Foreign exchange reserves are funds accumulated by governments or central banks for interventions in the foreign exchange market or for payment of external debts. An increase in foreign exchange reserves indicates that international transactions in the Chinese yuan are growing.

By currency, the US dollar, the key reserve currency, still ranks first at 59%, followed by the euro at 20%, the Japanese yen at 5.4%, the British pound at 5%, and the Chinese yuan at 2.88%.

While traditional currencies such as the dollar and euro remain steady, only the share of the Chinese yuan is on the rise. In fact, the yuan's share was 2.45% in the first quarter of last year, increased to 2.79% by the end of last year, and has continued to rise this year.

People’s Daily Online expressed a positive reaction to the steady increase in the yuan's share, stating that it reflects growing international confidence in the Chinese economy.

It particularly emphasized that from August 1, the yuan's share in the IMF Special Drawing Rights (SDR) currency basket will be raised from 10.92% to 12.28%.

Liao Qun, a researcher at the Chongyang Institute for Financial Studies at Renmin University, said, "The internationalization of the yuan will continue," and added, "In the future, the yuan will have a voice in the global trade and investment markets."

Zhou Maohua, a researcher at China Guangfa Bank, said, "The yuan's share in global foreign exchange reserves still does not correspond to the scale of China's economy and trade," and predicted that the yuan's role in the international community will continue to grow.