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Natixis’ Alicia García Herrero examines the renminbi’s succession to the IMF reserve currency with Euromoney

NatixisAliciaGarciaHerrero_001From October, the Chinese renminbi (RMB) is included in the special drawing rights (SDR) – the basket of currencies used by the International Monetary Fund (IMF) as a reserve currency – an acknowledgement of China’s remarkable growth in recent years.

As the first emerging market currency added to the SDR basket, the longer-term structural implications for the global economy are being widely discussed. Alicia García Herrero, chief economist for Asia Pacific, Natixis, spoke to Euromoney in order to offer her views on the long-term implications for both the currency’s value and other emerging currency’s potential succession to the IMF’s reserve.

Herrero says, “I would not be surprised to see the RMB weighting increased in 10 years, and it could also be joined by other EM currencies. The Indian rupee is very liquid and could be a candidate, as could the Brazilian real. The Russian rouble is also a possibility, though this is less likely because its bond market is much smaller.”

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