As the world rapidly embraces new financial orders and development packaged in the guise of a multipolar currency system, the US dollar is now standing in a questionable position. The dollar has weakened significantly, shedding nearly 10% of its value in the past year. That being said, a weak dollar is considered a vulnerable dollar and is now attracting credible foes that could derail its plan. The process of displacing the dollar has already begun, with the Chinese Yuan standing at the forefront of this very change. Can the yuan truly help accelerate the dollar’s decay? Let’s find out.
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China Is Spearheading Its Own Currency’s Expansion Amid Rapid Dollar Decline
As the US dollar weakens due to an array of external forces, including Trump’s tariff stance and rising geopolitical tensions, China is leaving no stone unturned to capitalize on the aforementioned development. China is now using all its strength to bolster the internationalization of the Chinese Yuan by attracting more foreign investor attention towards its currency.
Pan Gongsheng, the governor of the People’s Bank of China, recently shared his opinion on promoting a multipolar currency order. Gongsheng was clear about his intent, adding how the world should move away from the dollar or the idea of relying on a singular currency for the long term.
Gongsheng later announced plans to launch a center of digital yuan internationalization, which could significantly promote the yuan’s offshore usage. In addition to this, the bank is luring foreign attention through its future market. China has already roped in major foreign institutional inflows in 16 futures and options contracts listed in mainland China.
Moreover, the Shanghai Futures Exchange is also working on collecting feedback on a unique proposal. This proposal, if confirmed, will allow foreign currencies to be used for trading and collateral in China.
“Our proprietary data indicates strong inflows to CNY, not a surprise given the good performance of CNY financial assets. Our data tracks only institutional investors. Who are still very much underweight in CNY.” Said Ning Sun, senior EM strategist at State Street Markets.
Global Banks Want More Of The Chinese Currency, Not USD
In another key development, a new survey report from OMFIF revealed how global central banks are now looking forward to holding the Chinese currency in the near future.
Nearly 30% of the banks have expressed their desire to hold Chinese yuan and euros to counter budding de-dollarization.
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