Move over, U.S. Dollar

5.16.23 - 

Gold last traded at $1,988 an ounce. Silver at $23.75 an ounce.

Move over, U.S. dollar. China wants to make the yuan the global currency. - The Washington Post

Newsan, one of Argentina's biggest home appliance retailers, imports most of its products from China. Until now, it was paying for fridges, TVs and parts in U.S. dollars, the currency of international trade.

But last month, as part of a bid to relieve pressure on Argentina's dollar-strapped economy, Newsan started doing something new: settling deals in Chinese yuan.

"The yuan is becoming increasingly relevant as currency for international trade," said Luis Galli, chief executive of Newsan. "But beggars don't get to choose. This deal was born out of necessity."

Argentina's economy is - again - in crisis. A drought has wiped out key agricultural exports, pushing the economy, already grappling with skyrocketing inflation, to the brink of recession.

With Argentina's supply of U.S. dollars dwindling as a result, the government in April 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.

It wasn't having much luck - until recently. Suddenly 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.