The US dollar is swiftly losing control in international markets. The primary reason for this change is likely to be the changing financial order, with the multipolar currency system gaining steam globally. Several nations have voiced opinions to conduct trade in local currency, all while protecting their economies from stark US dollar volatility capable of decentralizing world economies.
In addition to this, the worsening US debt issues, as well as the dollar weaponization, have also been playing a key role in ushering in de-dollarization. These factors have compelled the nations to conduct trade in alternative currencies, with one currency rising up on the radar at a steady pace.
Also Read: When SHIB Hits $0.00005, You’ll Wish You Invested $1K Now—Here’s Why
Is the Dollar Getting Replaced?
The US dollar is currently standing at a very dangerous threshold. Trump’s strict tariff regime has battered the US dollar, pushing the DXY index to hit double digits. The low dollar threshold is now constantly raking in criticism with talks of a new currency taking over the international plane. The US dollar has been badly wounded due to Trump’s aggressive tariff policies. At the same time, the trade war fears are also adding more fuel to the de-dollarization narrative.
In this wake, the majority of the nations have lately been pivoting towards the Chinese yuan, bringing in a radical change in the traditional finance markets. Per a survey conducted by Renmin University International Monetary Institute, enterprises are keenly using yuan to settle international trends in a growing trend across the world.
The survey shows a direct hike in the percentage of entrepreneurs keen on using the yuan internationally. The statistics show nearly 21% of enterprises were keen to explore Yuan in settling international transactions in Q1. This percentage has now increased to 23% in the second quarter. The hike is showing a gradual ascent in the popularity of the yuan as a suitable currency alternative competing directly with the US dollar.
“We used to consider trade settlement as the key driver of the yuan’s internationalization. But now the focus has shifted to whether the yuan. Can serve as a safe-haven asset.” Yang Changjiang, a finance professor at Fudan University, shared.
Also Read: Ripple: AI Predicts Ways To Enjoy Life When XRP Hits $10
More About the Chinese Currency
The Chinese yuan is the fourth most used payment currency, boasting a share of 4.13 % in international markets. Per SCMP, the Chinese currency comprises a total of 2.18% of global forex reserves. The currency is slowly inching towards establishing a credible reputation on the market.
Also Read: U.S. Dollar Future in Focus: Will $100 Hold or Fade Fast?