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Treasury & Capital Markets
Standard Chartered says RMB’s inclusion to keep SDR stable
The inclusion of renminbi helps reduce the volatility of SDR’s exchange rate and therefore makes the value of SDR more stable.
The Asset 17 Oct 2016
Standard Chartered Bank (Hong Kong) Limited (SCBHK) has obtained approval from the People’s Bank of China to be the first commercial issuer of bonds denominated in Special Drawing Rights (SDRs) in China’s interbank bond market. The size of the issuance programme is 100 million SDRs (about 925 million yuan) and the bonds will be settled in renminbi. 
“The inclusion of renminbi helps reduce the volatility of SDR’s exchange rate and therefore makes the value of SDR more stable,” says Wesley Yang, head of financial markets of Standard Chartered Bank (China) Ltd, which has been appointed as the joint lead underwriter and joint lead bookrunner for the issuance. Road shows will be held in Beijing and Shanghai. 
“This not only increases the attractiveness of SDR as a reserve asset but also makes it a better investment and financing tool. It helps promote the two-way opening and development of China’s capital market, accelerate the pace of renminbi internationalization, and promote the capital account convertibility. These SDR bonds, to be settled in renminbi, will help promote SDR financial instruments, provide a channel for investors to invest in foreign currency bonds in the onshore market, and offer more diversified bond products in the market,” adds 
As the importance of renminbi increases globally, the International Monetary Fund (IMF) has included the renminbi in its SDR currency basket since 1 October 2016. As the SDR is now a better representation of the world’s major currencies, the market is getting more interested in SDR-denominated products for better risk diversification and management. In view of this, SCBHK plans to issue an SDR bond to capture market demand. 
May Tan, CEO of SCBHK, says: “The inclusion of renminbi in the IMF’s SDR currency basket is a significant milestone, reaffirming renminbi’s status as a global reserve currency.” 
SDRs are an international reserve asset created by the IMF. The value of the SDR is based on five major currencies, namely US dollar, euro, Japanese yen, British pound, and the newly added Chinese renminbi.  
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