Newsan, one of Argentina’s biggest home appliance retailers, has started settling deals in Chinese yuan instead of U.S. dollars, the currency of international trade. The move is part of a bid to relieve pressure on Argentina’s dollar-strapped economy. With Argentina’s supply of U.S. dollars dwindling, the government announced it would pay for $1 billion worth of imports from China in yuan and for $790 million worth of monthly imports thereafter. It also activated a currency swap agreement, making it possible for companies to borrow yuan from China, Argentina’s second-largest trading partner. The deal was welcome news for Beijing, which has long wanted its currency in wider use and to enjoy some of the power and prestige that the United States enjoys thanks to the dollar’s global domination. And it seems like more customers are willing to settle their bills in Chinese yuan, thanks variously to domestic economic crises, Western sanctions against Russia, China’s position as a major lender, and growing concerns about being beholden to Washington’s policies. While it may not happen anytime soon, the recent flurry of settlements in yuan does constitute some progress toward Chinese leader Xi Jinping’s vision: with China at the helm of a global economic order that is insulated from the fluctuations of the dollar and Western sanctions.
It seems like China is slowly but surely making progress towards its goal of making the yuan the global currency. While it may not happen anytime soon, the recent flurry of settlements in yuan does constitute some progress toward Chinese leader Xi Jinping’s vision: with China at the helm of a global economic order that is insulated from the fluctuations of the dollar and Western sanctions.
Who uses the Yuan Currency?
According to Business Insider, five countries are signaling yuan usage instead of USD, including Russia, Iran, Brazil, Argentina, and Bangladesh. These countries are making headway in using the yuan for trade, and China’s yuan is gaining increasing usage globally, pointing to the de-dollarization of international trade. However, it is important to note that the yuan is not yet a major global currency and its usage is still limited compared to the US dollar. The yuan is the official currency of the People’s Republic of China and is used only in China.
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