China's yuan joining International Monetary Fund currency basket likely to increase nation's economic

However, any more widening of the gap should be limited, as China aims for its currency to be included in the worldwide Monetary Fund's (IMF) SDR basket while client demand to convert yuan deposits to other currencies is close to ending.

"Some state-owned banks sold small amounts of dollars in onshore market intermittently to support the yuan".

Market players believe the spread between CNH and CNY FX rates will be curbed at below 500 pips as the People's Bank of China may jump in again to combat any expectation of continuous yuan depreciation. ― File picBEIJING, October 28 ― The yuan traded in Hong Kong fell to a one-month low as China's central bank cut its daily fixing for the first time this week, spurring speculation it will allow the currency to drop in the coming days.

It looks like China is going to get its long-held wish for the yuan to become a part of the IMF's reserve currency basket. They did not see speculative flows.

Bonds issued in September alone hit 2.5 trillion yuan (US$393.1 billion), up 128.2% year on year.

This year, more than 1,000 banks around the world have used the yuan as the currency of payment in trading with China, compared with more than 800 banks two years ago, statistics from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) showed.

"The central bank wouldn't tolerate a wider gap, so offshore intervention is possible", said Tommy Ong, managing director for treasury and markets at DBS Hong Kong Ltd. "China is committed to having a high degree of capital-account openness". The currency had a market share of 2.45 percent, lagging the Japanese yen's 2.88 percent.

According to the report, the move is significant as the global Monetary Fund meeting is set to make its final decision on whether to include the renminbi in the basket of currencies that make up its special drawing rights (SDR), a major goal in making the yuan an worldwide currency.