IMF No Longer Sees China's Yuan As Undervalued

MarketWatch Pulse

China's yuan is no longer undervalued, the International Monetary Fund said Tuesday in a report, a view that puts the currency , also known as renminbi, in better position to win reserve status at the IMF. "While undervaluation of the renminbi was a major factor causing the large imbalances in the past, our assessment now is that the substantial real effective appreciation over the past year has brought the exchange rate to a level that is no longer undervalued," the IMF said. There's already significant use of the yuan as a reserve currency, but reserve status at the IMF would put the currency into the group's elite basket that makes up its global forex benchmark, and possibly reduce China's cost of foreign borrowing. The four currencies that make up the IMF's forex basket are the U.S. dollar , the euro [s:eurusd], the British pound and Japanese yen .

Copyright © 2015 MarketWatch, Inc.

Continue Reading Below