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Recently, some media reported that the IMF officially raised the weight of the renminbi from 10.92% to 12.28% in August, continuing to remain in third place. At the same time, the renminbi has increased significantly compared to other currencies.
The renminbi is on fire in many countries
With China's economic development and increasing influence in the world, the weight of the renminbi in international trade has gradually increased, and more and more countries have increased the proportion of renminbi in foreign exchange reserves and used renminbi for settlement in international trade. Recently, with the increase in the weight of the renminbi, many countries have included the renminbi in their foreign exchange reserves or increased the share of the renminbi's reserves.
According to us media reports, since April this year, Israel has included the renminbi in foreign exchange reserve assets, and it is worth noting that Israel is selling dollar assets in exchange for the reserve share of the renminbi. You know, before that, Israel's foreign exchange reserves were only three foreign exchange currencies such as the US dollar, the euro, and the British pound. This move by Israel shows its recognition of the current international importance of the renminbi, and also shows its optimism about the future development prospects of the renminbi.
Israel's decision to include the renminbi in its foreign exchange reserve assets was not a head-scratch decision, but a trade-based one. According to relevant data, in 2021, Israel's imports from China reached $13.19 billion, an increase of 39.6% year-on-year. As Israel's imports from China have increased, China has become Israel's third-largest trading partner.
It can be seen that Israel's inclusion of the renminbi in foreign exchange asset reserves is due to the increase in the number of trade between Israel and China, and the increase in trade volume is behind the continuous improvement of China's manufacturing capacity.
In addition to Israel, countries such as Iran and Saudi Arabia have also shown strong recognition of the renminbi. Recently, Iran and Saudi Arabia and other countries have publicly stated that in the future trade with China's crude oil and oil, they will use the renminbi for trade settlement. You know, energy as the foundation of a country, oil is like the blood of a country. Prior to this, the vast majority of the world's energy and oil trade was settled through the US dollar. Countries such as Saudi Arabia and Iran use the renminbi to settle oil trade, which is not only a recognition of China's national strength, but also a recognition of the credit of the renminbi currency.
Not only that, before Saudi Arabia and Iran announced the settlement with oil, Russia had already announced that it would use renminbi settlement in oil trade with China.
Is the dollar era coming to an end?
As the weight of the renminbi in international currencies gradually increases, the weight of the US dollar is gradually decreasing, not only in the proportion of international trade currency use continues to decline, but is gradually equalized by the Euro in Europe, the use of the two accounts for about 38% and 37% respectively, a difference of less than 1%. Moreover, in the composition of the global foreign reserve currency, the share of the US dollar in the international reserve assets of the world has slipped to the lowest value in 25 years, accounting for only 58.8%, and has maintained a downward trend for 20 consecutive years. It is worth noting that among the reserves of foreign exchange assets, nearly a quarter of the share of the decline in the US dollar is occupied by the renminbi, which is converted into the foreign exchange reserves of the renminbi.
Not only has the dollar accounted for a declining share of foreign exchange reserves, but the U.S. Treasury bonds, which have been sought after by countries around the world in the past, have also suffered continuous sell-offs in many countries. Many countries, including China, Japan, the United Kingdom, Germany and other large holders of U.S. Treasury bonds, have been selling U.S. Treasuries on a large scale for many consecutive months, among which China, once the largest holder of U.S. Treasury bonds, has sold hundreds of billions of U.S. Treasuries in the past six months.
As the world currency of the US dollar, when countries conduct international trade, most of them will use the US dollar for trade settlement. But that is quietly changing. After the Russian-Ukrainian conflict, Western countries led by the United States imposed economic sanctions on Russia, and Russia also counterattacked. Russia announced that in the future, all oil and gas trade with Russia must be settled in Russian currency rubles, and the US dollar will no longer be used, which makes European countries that are extremely dependent on Russian natural gas have to reserve a large amount of rubles.
At the same time, India also announced the rupee settlement order, all countries that trade with India, the use of rupee settlement will have preferential treatment, coupled with the European Union countries led by many countries have shipped back a large amount of gold from the United States as monetary credit, and many countries announced the use of renminbi when trading with China. On the surface, countries around the world are reducing their dependence on the dollar and looking for a new currency for international trade.
As the world's monetary hegemon, the US dollar was bound to gold and oil by the United States, determining its status. Countries use the U.S. dollar for settlement when international trade occurs. But the United States, with the status of the dollar, has repeatedly harvested the world.
First of all, the over-issuance of currency, so that the world market and the United States to bear the consequences of over-issuance of currency, but also through the Federal Reserve's large-scale interest rate hikes, to increase the exchange rate of the US dollar, so that the wealth created by all countries in the world into the United States through the US dollar, but also during the Russian-Ukrainian conflict, there is no reason to ban the private property of Russian individuals, but also 159 Chinese companies included in the pre-delisting list.
The U.S. global harvest has reduced the credibility of the dollar among countries around the world, so countries around the world have begun to look for an alternative to the dollar.
Brief summary:
The renminbi's growing share in the international market and recognition by many countries is an important step towards the internationalization of the renminbi, and the dollar is losing the trust of countries around the world, which is a great opportunity for the renminbi to take its place. What do you think about that?