RMB Will Become A Reserve Currency And Will Create History.

"Although I am a scholar, I should not speculate, but my guess is that

This year will become the SDR currency. "

Eswar Prasad, a senior fellow of the Brookings Institution's global economic and development project, has boldly predicted that the renminbi will become an integral part of the world monetary fund (IMF)'s special drawing rights (SDR) package this year.

Eswar Prasad said that the renminbi is becoming a widely used form.

Money.

At the end of this year, when IMF is reviewing the SDR basket, if China keeps the liberalization of interest rates and expands the floating range of the RMB against the US dollar, it will be difficult for IMF to refuse to include Renminbi in a basket of currencies.

IMF current SDRs package

There are US dollars, euros, yen and sterling. Every five years, it reviews the composition of the SDR package currency. 2015 is the year of IMF review.

Outside estimates, this year's renminbi is included in the list of SDRs' package currencies.

"Not China needs IMF, but IMF needs China."

Eswar Prasad said that in view of the fact that the IMF governance reform was obstructed by the US Congress, allowing the renminbi to become a special drawing right currency could make China feel more secure in the interests of IMF.

"This will become an unprecedented event: an unconvertible currency becomes the SDR package currency.

If this is not happening this year, I think IMF will conduct the next audit in two to three years. "

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Central banks are the largest participants in the global foreign exchange market, with a total of nearly $12 trillion in the total dollar.

Therefore, the trend of the central bank's foreign exchange reserves has been closely watched by investors.

Despite the historical data rather than the future outlook, but once the data show that the central bank's holdings of US dollars, which may raise interest rates as soon as possible in June, the US Federal Reserve may trigger the expected increase in the strong dollar's continued rise.

Since July last year, the US dollar has risen rapidly and sharply, and the strong momentum has been rare for more than 10 years.

Citigroup statistics show that the rate of rise in the US dollar has not occurred in the past 40 years.

The US dollar has risen by 28% over the past ten months against the euro.

Amherst Pierpont Securities global strategist Robert Sinche told the Wall Street Journal: "the charm of the euro as a reserve currency has been lost, and the US dollar is the opposite."

According to the data on currency composition of official foreign exchange reserves released by IMF last year, the euro's share of foreign exchange reserves decreased by 1.5% to 22.6% in the third quarter of last year, the largest decline since 2004.

Meanwhile, the share of the US dollar increased by 1.6%, the largest increase in more than 10 years.

At present, the monetary policy of the Federal Reserve and the European Central Bank is showing differences.

Wall Street knowledge has mentioned that investors generally expect the Federal Reserve to open its first interest rate increase since 2008, from June to September.

The European Central Bank is busy resisting deflation, easing monetary policy and even launching QE.

The ECB's move triggered a sharp depreciation of the euro against the US dollar, while central banks suffered losses from the depreciation of the euro.

Wall Street noted that the dollar index hit a twelve year high of 100.29 in March 13th, and the euro reached a twelve year low of 1.0482 against the dollar.

Barclays Capital believes that the euro will still have much room to fall in the future.

Goldman Sachs declined three months in mid March, and the euro is expected to reach 1.02 against the dollar. It is expected that the euro will fall to parity against the US dollar in 6 months.

HSBC recently raised the euro against the US dollar at the end of 2016 to 1.10.

The Wall Street news has quoted the HSBC viewpoint, and the US dollar index has risen more than 25% since June 2014, compared with the increase in the 80-90 market in twentieth Century, or about 20%.