Thursday, September 3, 2015

BRICSPOST: Yuan Devaluation to Have no Impact on BRICS Bank

According to this article in the  BRICSPOST, the recent devaluation of the yuan by China will not impact the decision of the BRICS Bank to issue its first loan in yuan. Some had wondered if the new BRICS Bank or the AIIB might use SDR's in some way, but there is no indication of that so far. Below are some quotes from the BRICSPOST article.

"In continuing with recent dollar-less energy deals, currency swaps and foreign direct investment within the BRICS countries, the New Development Bank (NDB) will make its first round of loans in national currencies, cutting out the dollar.
“We will do our first loans in local currencies. Local currencies like the RMB and the Rupee,” the first President of the NDB, Kundapur Vaman Kamath told an Indian daily on Monday.
Although the NDB rival and US-Japan-led Asian Development Bank also has a local currency loan product, the new lender’s decision to snub the dollar is expected to have a wider impact.
Additionally, the paid-in-capital, or reserves at the BRICS Bank are denominated in each country’s currency.
This would aid China’s attempts to diminish the dollar’s dominance in global trade and finance. China is also pushing for the International Monetary Fund to endorse the Chinese yuan as a global reserve currency alongside the dollar and euro.
Meanwhile, NDB President Kamath told the Indian daily in Shanghai, that China’s yuan devaluation would not impact the lender’s work in any way."
. . . .  .
"The BRICS New Development Bank will name its first investment in April next year and the first loan will be issued in yuan."

Added note: In this BRICSPOST article, India announces support for inclusion of the yuan into the SDR currency basket. The article also notes the IMF expects to complete its review in November 2015. The IMF had previously announced that the current SDR basket will stay the same until at least September 2016 regardless of whether they decide to add the yuan in November. 

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