BRICS member China is in trouble as the Chinese Yuan is unable to keep pace with the growing US dollar. China’s exporters are bracing currency volatility as the US dollar outperformed the Chinese Yuan making it fall to its December 2023 lows. The development impacts businesses in China leading to losses and low profits to exporters and international currency operators.
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A recent report indicates that China’s exporters are shunning the Chinese Yuan and are storing value elsewhere. Exporters in China are only converting back what they need and are mostly staying away from the Chinese Yuan. The development is completely opposite to what BRICS had set to achieve this year by planning to make the Chinese Yuan and other local currencies thrive against the US dollar.
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BRICS: Exporters in China Are Shunning the Chinese Yuan
Keeping the US dollar in reserves is more attractive than hoarding the Chinese Yuan in China. The strengthening of the US dollar derailed the BRICS agenda of putting the Chinese Yuan ahead for cross-border transactions. Therefore, even exporters in China don’t want the Chinese Yuan now as the currency is dipping relentlessly against the US dollar.
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The de-dollarization initiative kick-started by BRICS is becoming harder to achieve due to the rising US dollar. Exporters and businesses are at the receiving end as BRICS promised to uplift the Chinese Yuan and local currencies for trade. In addition, currency investors believe that the Chinese Yuan will only dip further against the US dollar this year.
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China’s exports declined by 7.5% in March compared to last year reaching $279.7 billion and falling short of market expectations. The Chinese Yuan has already dipped more than 2.1% against the US dollar from the start of 2024. BRICS and the Chinese Yuan are finding it hard to fight the US dollar in the global markets.