The International Monetary Fund said on Saturday that it increased the weight of the dollar and the Chinese yuan during its review of the currencies that make up the assessment of the Special Drawing Rights, while the weight of the euro fell.

It is the first revision since the yuan joined the basket of currencies in 2016, in what marked a milestone in Beijing's efforts to internationalize its currency.

  • The International Monetary Fund raised the weight of the US currency to 43.38% from 41.73% previously.

  • The fund lifted the weight of the Chinese yuan to 12.285 from 10.92% previously.

  • The weight of the euro fell to 29.31% from 30.93% earlier.

  • The yen fell to 7.595 from 8.33%.

  • The British pound fell to 7.44% from 8.09%.

The International Monetary Fund said in a statement that its Executive Board had set the weight based on trade and financial market developments from 2017 to 2021.

The IMF added, "The Directors agreed that neither the COVID-19 pandemic nor developments in financial technology have had any significant impact on the relative role of currencies in the SDR basket thus far."

Despite the yuan's recent depreciation, it has appreciated about 2% against the dollar since 2016, and has risen about 6% against its major trading partners.

The People's Bank of China said in a statement on Sunday that China will continue to promote reform and open its financial market.

 What do you know about special drawing rights?

The Special Drawing Right (SDR) is an international interest-bearing reserve asset created by the Fund in 1969 as a complement to other reserve assets of member countries, allowing them to reduce dependence on higher-cost internal or external debt to build reserves.

The value of the SDR is based on a basket of international currencies consisting of the US dollar, the Japanese yen, the euro, the British pound and the Chinese yuan.

The SDR is neither a currency nor a claim on the Fund, but a potential claim on member countries' freely usable currencies.

The Fund sets daily the value of the SDR based on the number of fixed currencies included in the SDR valuation basket and the daily market exchange rates between the currencies included in this basket.

The SDR allocation is distributed only to member countries that choose to participate in the SDR administration, and all members of the Fund are currently participating in it.

The SDR is also a means of providing timely support to member countries that need it.

Allocations of special drawing rights are distributed to member countries in proportion to the size of their membership quota in the Fund, with 42.2% corresponding to the share of emerging market and developing economies, including 3.2% for low-income countries.

Prior to last August’s decision to distribute $650 billion, the Fund distributed units of Special Drawing Rights, which total 204.2 billion units (equivalent to approximately $318 billion), including 3 general distributions and an exceptional private distribution.