Chinese yuan reserve currency

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    On Monday, the Chinese yuan joined one of the most elite clubs on the planet: the International Monetary Fund's Special Drawing Rights basket of reserve currencies.

    IMF Managing Director Christine Lagarde said the yuan's inclusion was based on a clear indication of the reforms China has carried out.

    Of course, the IMF could be dead wrong.

    From a practical position, the IMF expects China will have to make its currency more freely tradable than it is - which, along with being a major exporter, is the other criteria the IMF considers in conferring reserve status on a currency, Money Morning Capital Wave Strategist Shah Gilani said on Monday. But there's a possibility the IMF jumped the gun on this.

    Dark horizons lay ahead if the Chinese yuan isn't stable enough to deserve its new global reserve status...

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