![]() ![]() The yuan surpassed the euro to become the second most dominant currency in Brazil's foreign reserves after the dollar at the end of 2022, according to the country's central bank, per Reuters on March 31. Moscow could snap up around $200 million in Chinese yuan each month, Bloomberg Economics reported last Tuesday. The yuan is one of the few key currencies available to Russia after Western sanctions cut the country off from the world's dollar-denominated financial system.īrazilian President Luiz Inacio Lula da Silva.īrazilian president Luiz Inacio Lula da Silva has been one of the most vocal proponents vocal about setting up alternative trade settlement currencies, going as far as to call on the BRICS countries - Brazil, Russia, India, China, and South Africa - to move away from the dollar.īrazil's central bank has already been snapping up the Chinese currency. The Chinese yuan has become so popular that is likely to be Russia's top currency choice when it replenishes its foreign currency exchange. ![]() On Russia's foreign exchange markets, the ruble-yuan trade accounted for 39% of total volumes, outpacing the ruble-dollar's 34% share, the central bank added. The Chinese yuan is already a top candidate as Russians bought 41.9 billion rubles, or $538 million worth of the Chinese currency in March, more than triple the 11.6 billion rubles worth of the currency purchased in February, Russia's central bank said on April 10. Russia's economy has been badly hamstrung by the sanctions - some Russian banks have been banned from SWIFT, the dollar-dominated Belgium-based messaging service that lets banks around the world communicate about cross-border transactions.Īnd at least half of Russia's $640 billion foreign currency reserves have been frozen by the trade restrictions.Īll of this has forced Russia to look for alternative currencies to use in international transactions. If there's one country at the forefront of using the Chinese yuan for its transactions, it's Russia - the country facing sweeping Western sanctions over its war with Ukraine. Russia's President Vladimir Putin and his Chinese counterpart Xi Jinping. Read further for five countries that have recently turned to the yuan for trade and other transactions - either to skirt sanctions or as an alternative to the greenback. While the intent may be there, Yellen, however, noted that it wasn't easy to replicate the eco-system - such as the international payments infrastructure - that supports the US dollar. Of course, it does create a desire on the part of China, of Russia, of Iran to find an alternative," Yelled said. Treasury Secretary Janet Yellen acknowledged as much, telling CNN in April: "There is a risk when we use financial sanctions that are linked to the role of the dollar that over time it could undermine the hegemony of the dollar." The use of the yuan overtook the use of the dollar in China's cross-border transactions for the first time in March, according to an April 26 research report by Bloomberg Intelligence. The sanctions that squeezed Russia's dollar currency reserves "increased the perceived risk that those debt assets can be frozen in the way that they've been frozen for Russia," billionaire investor Ray Dalio cautioned on an April 12 Julia La Roche Show.Įven President Emmanuel Macron of France – a key US ally - warned against the "extraterritoriality of the US dollar," suggesting in an April interview with Politico that Europe should cut its dependence on the greenback.Įurope "won't have the time nor the resources to finance our strategic autonomy and we will become vassals" should tensions between US and China heat up, Macron told Politico.Īmid these dire tidings, the Chinese yuan is seizing the opportunity and is mounting a challenge to the dollar's dominance. The US dollar has been the world's reserve currency since the second world war, playing an outsized role in the world's trade.īut countries globally are now lining up backup currencies for trade, as sanctions against Russia over its invasion of Ukraine have led to some prominent world leaders and business figures sounding a warning over the power Washington wields. Account icon An icon in the shape of a person's head and shoulders. ![]()
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