Judgement reserved

The decision made by the IMF Executive Board in November last year went into effect from October 1 this year. Here is the Bloomberg article on this. It contains the link to the IMF press statement too. ‘Bloomberg Views’ article presents a good quick historical overview of the yuan in the last two decades with other links too.

The IMF statement included this white lie:

The Renminbi’s inclusion reflects the progress made in reforming China’s monetary, foreign exchange, and financial systems, and acknowledges the advances made in liberalizing and improving the infrastructure of its financial markets.

This article in Bloomberg on the housing bubble in China (and why it is a bubble is well worth a read. It is short too.

My article on the Reserve Currency status for China comes out on Tuesday in MINT.

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2 thoughts on “Judgement reserved

  1. Dear Sir,
    I read your write-up in Mint yesterday (as I always do) and I had couple of questions.

    1. I couldn’t understand what does “simultaneous decline in the claims of offshore banks on China’s banks” means? My apologies for being a novice on the subject.

    2. You have ended by saying that IMF announcement is likely signalling a turn for the worse in the Chinese currency. Request if you can elaborate a bit on it.

    Thanks, Rajat

    Like

    1. (1) Foreign banks are reducing their exposure (or interbank loans) to Chinese banks.

      (2) It simply means that the endorsement and status have come at a time when the fundamentals are against the currency remaining strong and stable.

      Like

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