Yuan Deposes Dollar on China Border in Sign of Future

Posted by Ray on July 8, 2009 under Main | Be the First to Comment

According to Bloomberg, some in Vietnam will no longer accept US dollars and prefer the Chinese Yuan. This in itself is not huge news, it is only Vietnam, but you add that to the rhetoric from China, India, Russia and the fact that China is allowing 6 major corporations to settle trades in the Yuan versus the US dollar it is troubling.

This is how it starts, countries want settlement in different currencies other than the reserve currency and it spreads from there. The primary reason they want the Yuan, in this case, is because they feel it is less risky than the dollar. That is scary when communists are afraid of the risk of the dollar and want to settle transactions in their own currency.

Read the story here

Huang Xinyuan, who sells mining equipment and pesticides to customers across China’s border with Vietnam, says he no longer wants payment in U.S. dollars and prefers the yuan.

Sales using the greenback at Guangxi Jinbei Group, where Huang is vice president, dropped to 30 percent of contracts in 2008 from 87 percent in 2007. The yuan, which has gained 21 percent since it was allowed to strengthen against the dollar starting in 2005, offers greater stability, he said.

“In recent years, the dollar has gone in only one direction and that is down,” said Huang, 45, in his second- floor office in Pingxiang, a town set amongst karst limestone hills and sugar-cane fields in China’s southwest Guangxi Zhuang Autonomous Region, three kilometers (1.9 miles) from Vietnam. “Settling our orders in yuan removes a major risk.”