RMB Basket SDR Suspense Will Be Announced Directly Positive Or Limited

What the market is most concerned about is that international institutions may increase the demand for RMB currency and RMB asset allocation, especially Chinese bonds and RMB denominated bonds. However, from the perspective of the effect, it is expected that the pulling of RMB assets will be very limited.

In November 30th, the Executive Board of the International Monetary Fund (IMF) will decide whether to include the renminbi in the SDR (SDRs). At present, the opinions of the parties generally believe that the probability of RMB basket SDR is high. But analysts expect that even if the basket is imported, the direct pull effect on RMB assets will be limited, and its value will be more reflected in the symbolic meaning of RMB internationalization.

It is understood that IMF every 5 years to consider a SDR related agenda, including the choice of basket currency standard, the weight of each currency and SDR interest rates and other issues. At present, the basket basket monetary standard includes the largest export volume of goods and services in the past 5 years and whether the currency can be freely used by IMF.

Last time, in 2010, the renminbi met the requirements for export of goods, but failed to meet the "free use" conditions. In this year's deliberations, the renminbi will still be able to meet the export requirements and will be voted by the IMF executive board on the terms of "free use".

Generally speaking, IMF is required to get at least 70% of the voting rights, and important matters require more than 85% of the voting rights. Judging from the voting weight of the current IMF Member States, the United States is the largest, accounting for 17.68%, which is equivalent to having one vote veto on major matters. Other countries with higher voting rights include Japan, Germany, France, the United Kingdom and China, with voting rights of 6.56%, 6.12%, 4.51%, 4.51% and 4% respectively. At present, IMF Many of the member states have already expressed support for the renminbi's accession to the SDR. The US Treasury Secretary, the British government and President Lagarde of IMF have voiced their support, and the final outcome will be tomorrow's final vote.

If the RMB joins the SDR successfully, the market's greatest concern is that international institutions may increase the demand for RMB currency and RMB asset allocation, especially Chinese bonds and RMB denominated bonds. However, from the perspective of the effect, it is expected that the pulling of RMB assets will be very limited.

At present, SDR accounts for 2.4% of the international reserves. If central banks in different countries add renminbi assets to the SDR basket, the corresponding demand is only $about 40000000000, which accounts for a small proportion of the world's international reserves. In addition, in order to cushion the RMB basket SDR, the current SDR structure from the US dollar, the pound, the euro and the yen will be postponed from the end of this year to September 2016, which means that even if SDR is added to the SDR, the direct impact on the RMB will also be generated after three quarters.

Since the central bank actively guided the depreciation of the renminbi in August 11th this year, the market's expectation of RMB devaluation has increased. Foreign banks, represented by Bank of America and Merrill Lynch, expect RMB to join SDR or let go of its devaluation.

Mein Merrill Lynch warned recently that the huge division of monetary policy between China and the United States will bring pressure on the renminbi. By the end of next year, the yuan will depreciate to 9% to 7 against the US dollar. The pressure of devaluation will increase sharply after the IMF's vote on SDR in the end of the month.

GF Securities Chen Guo also issued a similar view, he said, adding SDR It may change the central bank's sustained support for the RMB exchange rate. depreciation Space is expected to open. Despite a series of devaluation, the Renminbi remained strong in all currencies, and only $2.9% appreciated against the renminbi so far this year. After joining the SDR, the central bank may pay more attention to the domestic monetary policy and abandon its support for the RMB exchange rate. And it does not rule out a one-off devaluation way to prevent capital outflow in a period of sustained devaluation.

However, Wang Han, an analyst at Xingye securities, pointed out that from the recent data, the Fed's interest rate hike in December was expected to increase significantly after the October non farm employment data significantly exceeded expectations. However, the market's expectation of devaluation of the renminbi continued to fall after October, which means that the market's concern for the currency is declining.

Hu Yufeng, a researcher at CITIC Securities, believes that SDR is essentially a bookkeeping unit and can not be used directly for payment and settlement of international trade, nor can it be converted into gold. Therefore, after the accession to SDR, the demand for RMB is limited. In fact, in real operation, the total volume of SDR spanactions is also low and the application scope is limited. Therefore, joining SDR will not directly increase the demand for RMB in the international market.

Hu Yufeng pointed out that the key to deciding the attractiveness of RMB assets lies in the domestic economic situation. At present, China's fundamentals are not optimistic, coupled with the expectation of the Fed's interest rate increase during the year, the attractiveness of RMB assets is limited, and the inflow of funds in the short term has little momentum. The trend of bond yields between China and the United States is not easy to find. With the recovery of the US economic recovery, the interest rate spreads between the US and China's Treasury yields are showing a gradual narrowing. Under the conditions of weak internal economic growth and strong external diversion, it is expected that no capital will flow into the domestic capital market after the RMB enters the SDR.

Wang Han, an analyst at Xingye securities, also said that the impact of joining the SDR is more reflected in confidence level, which helps to enhance the attractiveness of RMB assets, but it has limited or limited contribution to the extensive use of RMB. From the perspective of RMB internationalization, although RMB accounts for third of the world's total trade settlement, it is still low compared with the US dollar and euro, and has not entered the top five in cross-border payment. Therefore, RMB internationalization still has a long way to go. Joining the SDR is just a new start.