China, the SDR and a Less Eurocentric World

It is official. The yuan will be included in the International Monetary Fund's special drawing rights (SDR). The 10.4 percent share is a bit more than I expected, but less than the 14 to 16 percent the IMF's staff intimated a few months ago. This is a significant event, even if there is no short-term market opportunity.

The yuan's exchange rate against the dollar steadily declined over November, contrary to conspiracy theories that warned Chinese officials would devalue the yuan only after it joined the SDR. It did not wait.