The US dollar remains unfazed by the growing actions of multipolar currencies. However, this does not change the fact that the US currency is still in deep trouble and can still spark conflict in the rising arena of local currencies ready to challenge its prestige and supremacy.
Even though the Chinese yuan may have scaled back its gradual approach to overthrowing the dollar, the Chinese currency remains resolute on the path to establishing dominance in the currency vertical. Here’s how the Chinese yuan can still counter the US dollar and emerge victorious on all economic fronts.
Also read: US Dollar hammers Chinese Yuan, Indian Rupee and Japanese Yen
Reasons that can help the Chinese yuan bring down the US dollar
1: Global economic change
The days when the world bowed globally to the prestige and reputation of the US dollar are over. With the multipolar monetary discourse in circulation, the competition to beat the dollar as the world’s leading currency is accelerating day by day. Yuan has consistently stepped up calls to destroy the US dollar by reducing its reliability against the US currency. As China partners with Russia and associated BRICS countries, the nation projects a strong power dynamic, threatening the decades-old political and economic legacy of the United States.
2: Persistent monetary and trade tensions
The United States has reportedly conducted several negotiations to impose sanctions on certain Chinese banks that were helping Russia by providing financial aid. On the other hand, Russia and China are conducting trade negotiations worth $260 billion without using the US dollar. If the United States imposes sanctions on China, the consequences could have disastrous consequences for the United States, as it could end up seriously jeopardizing the economic health of the country.
“The United States would create a gargantuan source of financial instability not only for China but also for itself,” said Brian Wong, a researcher at the Center on Contemporary China and the World at the University of Hong Kong.
As China and Russia abandon the US dollar, monetary talk is now shifting to the yuan and ruble, where the yuan appears to be gaining steady market momentum through continued adaptation and integration with other countries and markets .
3: Geopolitical unrest
One of the main reasons why the yuan could acquire a higher status than the dollar is its ability to integrate into several economic spheres during times of crisis.
Also Read: US Dollar Fails to Overtake Nigerian Naira Despite Overtaking Yuan and Yen
As geopolitical tensions escalate between Russia and Ukraine, Russia is actively using the yuan to deal with sanctions imposed on the United States, doubling the pressure on the dollar.
“It appears that other emerging countries are also using the yuan to import Russian crude oil,” said Toru Nishihama, chief economist at the Dai-ichi Life Research Institute.
reference: watcher.guru