BUENOS AIRES, Oct. 6 (Xinhua) -- The Chinese yuan's inclusion in the International Monetary Fund (IMF)'s Special Drawing Rights (SDR) basket from Oct. 1 is crucial for the currency's globalization, said an Argentine economist.
In an interview with Xinhua, Jorge Castro, director of the Institute of Strategic Planning in Buenos Aires said the yuan is the only currency in the SDR that comes from a developing nation and that its new status will help create a more multipolar economic order.
"The permanent inclusion of the yuan in the IMF's basket of currencies is a step of extraordinary importance for the yuan's conversion into a global currency. This accelerates its internationalization and all signs indicate it will become a global currency in the next five or six years," Castro said.
"Trade in our times is led by China, which will increase the use of the yuan in international trade," he continued.
The SDR is a basket of reserve currencies founded by the IMF in 1969 to supplement its members' official reserves and to allow them to exchange currencies in times of need.
"In 1990, the U.S. GDP was around 22 percent of the global total, which is now under 15 percent. China has become the second largest global economy...making U.S. dollar and the Chinese yuan two crucial global currencies," said the economist.
For Castro, the IMF's decision to include the yuan is due to China's financial reform and the openness of its market.
"The two things are linked. With the financial reform, China's financial system is almost liberalized and its interest rates depend ever more on the market and less on the central bank. This means China is becoming fully integrated with the global system and leading globalization efforts alongside the United States."
Castro also said the IMF's decision will impact Argentina as "China is Argentina's main foreign investor. Furthermore, China accounts for over two-thirds of the country's agricultural exports."
"Using the yuan as a global currency will accelerate the growth of Argentina's agricultural exports and will increase China's direct investment in Argentina," the expert added. Enditem
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