China has pledged to boost the role of the renminbi in the international economy as the country prepares to take new steps to develop the reputation and more widespread use of its currency.
The People's Bank of China (PBOC) said today it was seeking to increase the use of the renminbi as a reserve currency for central banks and governments around the world, and wanted to improve the currency's "infrastructure" and expand its role in financing cross-border investment and trade.
Last year, the International Monetary Fund (IMF) confirmed the addition of the yuan to its basket of currencies which make up the IMF's reserve currency, the so-called "special drawing rights" (SDR). The other four currencies in the SDR basket include the US dollar, the euro, the Japanese yen and sterling.
The yuan's addition to the SDR becomes effective in October, where it will become the third-most important currency with a weighting of 10.92 per cent, compared to nearly 42 per cent for the dollar and 31 per cent for the euro.
The comments come ahead of the PBOC's publication of its annual report into the "internationalisation" of the China's currency, which updates its progress and outlines next steps to advance the use of yuan.
The onshore exchange rate of the renminbi is set daily by the PBOC with the currency then allowed to move up and down in a narrow band around the mid-point. Today's rate was set at 6.6594 against the US dollar, with the yuan having gradually drifted by two per cent since last summer's shock move by the PBOC to wipe 1.8 per cent off the currency overnight – a decision which caused ripples throughout the financial markets in August 2015.