The International Monetary Fund (IMF) has lifted the yuan’s weighting in the Special Drawing Rights (SDR) currency basket after the IMF Executive Board concluded its quinquennial SDR valuation review.

The Chinese currency yuan’s weighting was raised to 12.28 percent from 10.92 percent in its first regular review of the SDR evaluation since the yuan was included in the SDR basket in 2016, the People’s Bank of China (PBC), the country’s central bank, said in a statement on Sunday.

The weighting of the US dollar was also raised, up to 43.38 percent from 41.73 percent.

The updated basket implies slightly higher weights for the US dollar and the Chinese renminbi and, accordingly, somewhat lower weights for the British pound, the euro, and the Japanese yen, the IMF said. 

The yuan’s weighting remains in the third place in the SDR basket after the US dollar and euro, according to the statement.

The updated basket weights will come into effect on August 1 this year, with the next SDR review scheduled be concluded before the end of July 2027.

The last SDR valuation review was concluded in 2015. Under the existing SDR valuation method adopted by the IMF Executive Board, the SDR currency basket is reviewed every five years unless developments in the interim justify an earlier review. The current review is taking place about one year later than originally scheduled. 

The SDR is an international reserve asset created by the IMF in 1969 to supplement its member countries’ official reserves. On October 1, 2016, the IMF added the Chinese yuan to the basket of currencies that make up the SDR, marking an important milestone in the integration of the Chinese economy into the global financial system.

“Directors broadly acknowledged the progress made on financial market reforms in China, while calling for additional efforts to further open and deepen the onshore yuan market, with some directors also stressing the need to further enhance data transparency,” said the IMF.

The PBC said in the statement that it will work with other financial departments to continue unswervingly promoting reform and opening up of China’s financial markets, simplify the procedures for foreign investors to invest in the Chinese market, enrich the range of investable assets, strengthen data disclosure, and improve business environment.

“We will continuously improve the convenience of investing in the Chinese market, creating a more favorable environment for foreign investors and international institutions,” the central bank said.