The recent decision by the People?s Republic of China to free its currency (the yuan) from its peg to the dollar, which has lasted for almost a decade, and to switch the link to a basket of currencies, has been hailed by the U.S., Europe and other Asian countries as a good move.

Most believe that it is a small step in the right direction, towards increasing the balance and stability of the global economy.

However, says Mark Walker, director at South African ICT research firm BMI-T: ?It is difficult to tell what it will mean for the local ICT sector, but it is certain that there will be a reduction in transparency, as nobody knows what the other currencies in the basket are. One day it could be the Rand versus the U.S. dollar, and the next the Rand versus something else. It is like taking the average of averages, and is a danger for the general market.?

Walker says that this lack of transparency will lead to uncertainty, and will hamper ICT companies? ability to plan ahead, and work out possible manufacturing costs of IT products made in China.

He adds that companies who have moved, or sold off much, or even all, of their IT manufacturing operations to China will have the most difficulty in planning, and he believes that those companies who have not moved operations to China will now find other offshore destinations to avoid uncertainty.

The revaluation could also cause increases in the export costs of IT components from China, which might trigger cash flow problems. Many, however, note that, at the same time, it will increase the domestic purchasing power of European countries.

Also according to Walker, the fact that nobody knows what currencies are in the basket, will still allow China to have a good and substantial control of its currency fluctuations.

Mark Lu, CEO of Rectron, believes that the yuan?s revaluation ?will have no impact on the local IT sector at all?. He notes that the small increase of 2 percent was actually less than market expectations, and adds that all currencies were back to normal a day after the change.

Lu adds: ?There will, however, be a huge impact on the local IT industry if the Chinese do this revaluation on a regular and ongoing basis, and with higher rate shifts, of about 20 percent.?

Walker also adds that there have been rumblings in the industry, with large ICT companies shifting focus -- from being hardware suppliers to becoming more services-orientated -- for instance IBM, which sold off its PC division to Lenovo. ?Could this have a possible connection to China?s decision?? he asks. Could China become the IT capital of the world, and call the shots from a technology perspective?

Walker says: ?IT is the ultimate political tool, and it is all about power. With IT you have more information, and more information means more power.?

?China is vastly underestimated in terms of its impact on world economics, as well as the IT industry, but who knows what the net effect of this recent currency change will be?? he concludes.