Can the yuan make gains against the dollar with a repeat of the US debt ceiling crisis?

Investors around the world held their breath last month as they awaited a political agreement between Democrats and Republicans on a cap. United StateSystem Beijing He rubs his hands together to take advantage of the politicians’ brinkmanship Washington.

June 5th was the date on which the government was established Joe Biden She would have run out of cash to pay off her debts, a scenario that would have greatly weakened her Sovereign credit rating The world’s largest economy and undermine global confidence in American dollaropening a window of opportunity China.

he International Monetary Fund (International Monetary Fund) made up of 190 members, is an essential part of the global financial system led United State, looking more and more to the east. In March, Kristalina Georgieva, Managing Director of International Monetary Fund applauded China For the potential contribution of 30% to global economic growth this year, which it has done consistently since the global financial crisis of 2007-2008.

Despite the fact that Republicans and Democrats have finally reached an agreement to avoid an embarrassing stumble, big interest rate increases from before Federal Reserve – with a total of 500 basis points in the last 14 months – it was like a sword hanging over many emerging markets.

dollar hegemony dispute

like China Recovering from the economic impact of COVID-19Analysts believe that the country has several tools. Most notably, investing in the yuan in projects Belt and Road InitiativeSettlement of the yuan with major trading partners, promotion digital yuan and diversification of non-cash reserves, which could undermine the global financial system paid for in US dollars.

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«China It is believed that the system led United StateIn particular, the dominance of the US dollar over the rules that play against the interests of the state ChinaL explained South China Morning Post Sun Yunprogram director China affiliate motivation centerdepends on Washington.

Therefore, the credibility is gradually undermined United State A review of this system is in the interest of the long term China». However, he said sunthe yuan can not replace the dollar “in the foreseeable future.”

Analysts said to South China Morning Post They hope that the international frustration of the debt ceiling’s recurring problems United State And perceptions of US protectionism will shift global finance away from the dollar, but not completely or immediately.

Progress has been noted in trade agreements between the two countries China And its partners are mainly developing countries, an area that system Beijing It has been able to leverage its commercial advantage to rapidly increase the use of the Chinese currency.

Eight countries, incl RussiaAnd BrazilAnd ArgentinaAnd Kingdom of Saudi Arabia And Thailandthey accepted the yuan as payments for oil, gas and a nuclear power plant, and this momentum will only increase thanks to major business deals and share China In the brixwhich is also a block that includes BrazilAnd RussiaAnd India And South Africa.

Aileen Morales

"Beer nerd. Food fanatic. Alcohol scholar. Tv practitioner. Writer. Troublemaker. Falls down a lot."

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