Yuan devaluation likely an orchestrated move to join SDR

AFTER last week's changes in Chinese arrangements for handling the renminbi's exchange rate, the contours of the currency's expected entry into the Special Drawing Rights (SDR) next year are becoming clearer.

Last week's roller-coaster renminbi decline against the dollar was widely portrayed as a "devaluation" that could disrupt world capital markets and possibly derail Beijing's plan to become part of the International Monetary Fund's (IMF) composite currency unit.

However, it is more probable that the adjustment in the dollar-renminbi link forms a central element in an orchestrated strategy with the IMF that increases the likelihood that the renminbi will indeed join the SDR, in a decision that would be implemented in September 2016.