The International Monetary Fund finally made up its mind and included China in its basket of reserve currencies on Nov. 30 What they didn’t tell us, however, was exactly what that basket would look like—until now.
The determination of the weightings and the calculation of the Special Drawing Rights (SDR) exchange rate is very complicated. Suffice it to say the more weight a currency gets, the more important the IMF thinks it is.
The IMF does not waste space telling us that the euro is the biggest loser in the rebalancing, but sometimes two tables are worth more than 1,000 words.
Clearly, China is gaining importance and the euro is losing importance.
Table 1. New weightings after the inclusion of the renminbi
The new weightings of the SDR currency basket effective October 1, 2016 IMF
