BRICS member China reported settling 8.9 trillion in the Chinese yuan with ASEAN countries, which is equivalent to $1.3 trillion. The development marks more than 50% year-on-year increase, with the local currency taking predominance against the US dollar. This marks a strategic shift in Southeast Asia that is considering diversifying its cross-border payments, favoring local currencies. Read here to know how many sectors in the US will be affected if BRICS ditches the dollar for trade.
De-dollarization is growing within BRICS and ASEAN countries, as the Chinese yuan is becoming the first preference for payment settlements. Apart from the Chinese yuan, the Indonesian rupiah is the second-most used local currency between China and the ASEAN alliance. “Our cross-border renminbi transactions in ASEAN reached 8.9 trillion yuan in 2024,” said Liu Jun, counsellor at China’s Mission to ASEAN, to Jakarta Globe.
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The ASEAN Alliance Accepts the Chinese Yuan For Payments: BRICS Member China Gains the Most
The counsellor added that using the Chinese yuan leads to monetary security among BRICS and ASEAN nations. “The renminbi is celebrating its role as a key regional currency. It contributes significantly to the financial stability of this region,” said the counsellor. The de-dollarization initiative is in full swing in the Southeast Asian region, with trillions worth of payments being settled in local currencies. This adds strain on the US dollar’s prospects, leading to a deficit in the long run.
China is one of the biggest markets for ASEAN countries, and the BRICS member is aggressively pushing the Chinese yuan for trade. Apart from the Chinese yuan and the Indonesian rupiah, the Russian ruble, Indian rupee, and South African rand are among the most-used currencies. If the trend continues, the US dollar will be the hardest hit. Leading local currencies will challenge its position at the top of the forex markets.