– This is the script of CNBC's news report for China's CCTV on November 30, Monday.
Welcome to CNBC Business Daily, I'm Qian Chen.
With the IMF set to decide on whether to include the Yuan in its SDR basket, we look back at some of the key milestones for the Chinese currency.
In December 1996 Beijing allowed the yuan to be fully convertible into foreign currencies, but ONLY for trade purposes. Not for the capital account.
During the Asian financial crisis, China won praise for not devaluing its currency leaving the Yuan pegged at 8.28 against the US dollar.
Fast forward to 2005, after Beijing joined the WTO and China shocked the world on July 21 with a 2.1% revaluation, putting the Yuan at 8.11 to the greenback.
It was pretty stable until the global financial crisis... then, in July 2008 the PBOC effectively pegged the Yuan against the dollar at 6.83 as an emergency measure. It stayed around there until the middle of 2010, when the global economy started to recover, returning to a managed float based on a basket of currencies.
Around the same time, the PBOC and HKMA expanded the scope of Yuan clearing in Hong Kong, and offshore trading took off.
By June 2013 the Yuan was gaining recognition around the globe, and the Bank of England became the 20th central bank to sign a swap deal with the PBOC.
The Chinese central bank has been stepping up reforms this year ahead of the IMF decision
And in August , the PBOC surprised investors with a near 2% devaluation, and a shift to a more market oriented yuan reference rate. Would all these be enough for the IMF to include RMB into its SDR currency basket?
Analysts believe the inclusion will raise the circulation of Yuan.
[TONY NASH...Chief Economist at Complete Intelligence] "101020 They already have direct currency conversion agreements with places like Qatar, UAE and Saudi. 101026 So theyr'e going to start buying energy in Chinese Yuan. 101031 So this will rapidly raise the circulation of Yuan once it's internationalized. 101038 That 's a big deal and I don't think that's recognized enough. 101044 "
With the Yuan now being one of the world's most used currencies, some argue it makes sense for it to be part of the reserve currency club.
Others say, it's a symbolic ego trip for Beijing with the Yuan still not freely usable in the strictest sense.
[CLAUDIO PIRON, BOFA MERRILL LYNCH] "(START HERE) so that would be 25-30 bn that would go in the terms that China would have in the total allocation that's a given. But we already know that foreign central banks own around 70-80 bn, so in a certain sense it's already sufficiently owned to cover that. So again, it's more of a symbolic, a very historical day, and it will certainly be imp and meaningful bec China has a reserve currency status." (END HERE)"
CNBC's Qian Chen, reporting from Singapore.