US Treasury Secretary Says CNY is Not an Elite Currency

U.S. Treasury Secretary Jack Lew said Tuesday that China’s yuan is not yet ready to join an elite grouping of currencies used by the International Monetary Fund.

China has expressed interest in having the yuan included in the IMF’s Special Drawing Rights basket, which the organization uses to value reserve assets. The basket currently includes the dollar, euro, British pound and Japanese yen.

Lew acknowledged that Beijing has loosened its grip on the yuan, but said that “further liberalization and reform are needed for the [yuan] to meet [the IMF] standard.”

Lew’s comments, made Tuesday in San Francisco, come on the heels of his trip to Beijing, where the Obama administration stalwart met with Chinese officials and pressed them to further open markets.
Treasury officials have long accused China of keeping its currency artificially low by hoarding foreign reserves, instead of allowing it to move freely in foreign exchange markets.

A weak currency cheapens the price of a country’s exports, making them more attractive to international buyers by undercutting competitors. China’s economy is primarily export-driven, and having a leg up on the international competition has allowed its economy to boom in recent decades.

via CNN

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza