China’s yuan could be included in the Bangko Sentral ng Pilipinas’ (BSP) currency reserves once its addition to the Special Drawing Rights (SDR) basket is finalized next year.
“Over time . . . you will have yuan in the basket, including [the]dollar, euro, yen and pound. Eventually the yuan will be part of active reserve management . . . we have to consider yuan in our reserve portfolio,” central bank Deputy Governor Diwa Guinigundo told reporters late Monday.
The International Monetary Fund’s (IMF) Executive Board last month decided that the yuan, also known as the renminbi, would be included in the SDR basket from October 1, 2016, effectively anointing it as a major reserve currency. The yuan will be given a 10.92-percent weight.
Measured in US dollars, the Philippines’ gross international reserves (GIR) as of
November amounted to $80.57 billion, enough to cover 10.3 months of merchandise imports and payments of services and income.
The central bank has previously said that its yuan holdings were mainly in the Executives’ Meeting of East Asia Pacific Central Banks’ Asian Bond fund and the Bank of International Settlements’ China fund.
The yuan’s addition to the SDR basket, Guinigundo said, could spur the Philippines to issue bonds in the currency.
“It depends on the requirements of the private sector and the government . . . It is possible because the Chinese economy is the second-biggest in the world and therefore, in terms of cross-border transactions, the use of Chinese renminbi is expected to accelerate,” he said.
Ultimately, the use of the yuan will be felt in both the bond and foreign exchange market, Guinigundo added.
The central bank has said it will be natural for countries to increase the yuan composition of their international reserves.
It also said the Philippines could look at the yuan as a medium of settling transactions, noting growing trade with China.
China was said to account for about 12 percent to 14 percent of Philippine exports and about 8 percent to 9 percent of imports.