Doha: An increasing number of world countries are showing greater openness in their trade exchanges to the Euro and the Chinese Yuan and even a basket of currencies, along with the strong dollar that has been dominating global trade since the end of World War II, in an effort that seems closer to adopting a tri-currency reserve system that targets, among other things, the diversification of risk.
China, leads this openness in a steadfast quest for expanding the use of Yuan in its external payments, which was culminated last March, when its share from payments and the received mounts across borders rose to a record 48 percent from almost zero in 2010, dropping the dollar’s share to 47 percent from 83 percent over the same period.
While China completed a first transaction to buy the liquefied natural gas (LNG) in Yuan which estimated 65,000 tons in a deal that put the dollar under pressure, it pivoted toward creating an offshore Yuan centers in Hong Kong, London and Singapore, allowing foreign companies to hold and trade in Yuan-denominated assets.
Brazil also made a decision in Mar. 29, 2023, to deal with Yuan in its trade with China which amounted to a roughly USD 150 million annually, a step that came after consecutive events that encourage abandoning US dollar in the global trade. Commenting on these developments, financial analyst Ramzi Kassemia told Qatar News Agency (QNA) that world economies are moving towards adopting a tri-currency reserve system that includes US dollar, Euro and Yuan with the erosion of US dollar’s share in the global reserves at the expense of Yuan.He pointed out that some global central banks have taken vital steps to diversify their reserves from foreign currencies, and not being limited to the US dollar, which has recently been done by major economies such as Russia, China, India, South Africa and Brazil, with the intentions of some of these countries to turn to gold as an essential and major part of those reserves, as gold allows central banks to diversify their assets away from the risks of the dollar and US bonds.
The Chinese Central Bank was the largest buyer of gold in the world during the past five years, and therefore it can be said that the Chinese Yuan derives its strength from the surplus of China’s trade balance with most countries of the world, in addition to the large reserves of gold, Kassemia added. He pointed out that the Russian-Ukrainian war and the subsequent freezing of a roughly $ 300 bn Russian foreign reserves have led to the fear of other countries that the dollar would be used as a pressure card on them, so many countries have resorted to increasing their dealings in the Yuan.
