China IMF Victory to Sap Central Bank Appetite for Aussie Debt
- Yuan entry into Special Drawing Rights basket to lure inflows
- Reserve managers may reduce holdings of yuan proxy currencies
Australian one-hundred dollar banknotes.
Photographer: Brent Lewin/BloombergThis article is for subscribers only.
China is about to deal another blow to Australian bonds as the yuan’s ascent into the International Monetary Fund’s reserves diverts investments from Aussie-dollar assets.
The IMF signaled it will include the yuan as the fifth currency in its Special Drawing Rights basket this month, a stamp of approval for China’s progress in internationalizing the currency. Standard Chartered Plc estimates up to $1.1 trillion will enter the nation in the next five years due to the endorsement. One casualty of such diversification will be the Australian dollar, according to Credit Suisse Group AG, BNP Paribas SA and Mizuho Bank Ltd.