Argentina to pay for Chinese imports in yuan rather than US dollars

[beijingwalker]

Argentina to pay for Chinese imports in yuan rather than US dollars​

Wang Qingchu
12:54 UTC+8, 2023-04-27

Argentina will pay for imports from China in yuan instead of US dollars for settlement, the country's Economy Minister Sergio Massa said at a press conference on April 26, noting that the move signifies stronger bilateral trade ties, China Central Television reported on Thursday.

After reaching the agreement with various companies, Argentina will use the yuan for imports from China worth about US$1.04 billion this month, accelerating imports from China in the next few months as the move is expected to increase efficiency by reducing authorization time.

Starting from May, Argentina is expected to use the yuan for imports from China worth US$790 million to US$1 billion.

Using yuan for settlement not only helps to strengthen international reserves but also facilitates bilateral trade and brings greater flexibility, Massa said.

Chinese Ambassador to Argentina Zou Xiaoli said that strengthening economic and trade cooperation between China and Argentina is an important part of the comprehensive strategic partnership between the two countries and acknowledged the exchange as having "great potential" for both.

China supports Argentina's efforts to maintain economic and financial stability, as reflected in the joint statement issued during President Alberto Fernández's visit to China last year, Zhou added.

At the beginning of this year, the Central Bank of Argentina stated that Argentina and China had officially expanded their currency swap agreement, strengthening Argentina's existing 130-billion-yuan (US$19.5 billion) foreign exchange reserve and activating a 35-billion-yuan disposable amount.

Argentina to pay for Chinese imports in yuan rather than US dollars

After reaching the agreement with various companies, Argentina will use the yuan for imports from Ch

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[大汉奸柳传志]

damn son, my backyard is on fire.

 

[beijingwalker]

Yuan Flips USD for Chinese Cross-Border Transactions as Dollar Distancing Accelerates​

Updated by Kyle Baird
27 April 2023, 07:40 GMT+0000

In Brief

• China's cross-border trade is dominated by the yuan.
• Argentina and Thailand are de-dollarizing.
• The greenback's dominance as global reserve is ending.

More countries are dropping the U.S. dollar like a proverbial hot potato. As a result, Chinese cross-border transactions are now dominated by its own currency, the yuan.

The Chinese yuan has overtaken the U.S. dollar as the most-used currency in China’s cross-border transactions for the first time in history.

Chinese cross-border payments and receipts in yuan rose to a record $549.9 billion in March from $434.5 billion a month earlier, according to Reuters.

This has increased the yuan’s share of cross-border transactions to 48.4% while the greenback’s share declined to 46.7%.

China has been pushing its own currency for international transactions in an effort to distance itself from the dollar. Furthermore, the number of countries adopting the yuan for trade has surged in recent months.

Chinese Yuan/USD Share of Cross-Border Transactions – Bloomberg/Twitter

Reuters noted that the volume of cross-border transactions covers both the current and capital accounts.

Countries Queuing to Ditch The Dollar​

The U.S. banking crisis, which has seen four major banks collapse so far this year, is stoking fears about the dollar’s position as a global reserve currency.

This week Argentina and China made a similar pact. On April 26, Reuters reported that Argentina would start to pay for Chinese imports in yuan rather than dollars. The move aims to relieve the country’s dwindling dollar reserves.

According to the Argentinian government, the country aims to pay around $1 billion of Chinese imports in yuan instead of dollars this month.

On April 27, Thai local media reported that the Bank of Thailand was in talks with China’s central bank. The two are mulling the use of yuan-baht settlements to “mitigate foreign exchange risk amid ongoing US dollar volatility.”

In late March, Brazil and China came to an agreement to use their own currencies for trade rather than going through the dollar.

In addition to Brazil and Argentina, Russia, India, Kenya, Kazakhstan, Pakistan, Saudi Arabia, the UAE, and several ASEAN nations have all dropped the dollar in favor of local currencies to trade.

In late March, a Russian government official talked up a BRICS digital currency to distance the bloc from the dollar.

USD Devaluation Over Time​

Dollar distancing and devaluation is not a new thing. The greenback has diminished in terms of purchasing power since 1971. This was when U.S. President Nixon ceased the direct convertibility of dollars to gold.

However, central banks still hold about 60% of their foreign exchange reserves in dollars, according to Visual Capitalist.

The move out of USD has also seen inflows into store-of-value assets such as gold and Bitcoin. As the de-dollarization trend continues, demand for crypto and commodities is likely to increase.

Yuan Flips USD for Chinese Cross-Border Transactions as Dollar Distancing Accelerates

More countries are dropping the U.S. dollar like a proverbial hot potato. The yuan now dominate Chinese cross-border transactions.

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