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In the international political and economic arena in recent years, a new trend that cannot be ignored is changing the balance of power in global currencies. This is the rise of the yuan, especially against the backdrop of the siege of Russia by the United States and the West, which has chosen the yuan as an important tool for its economic transactions.
In three parts, we will explore the significance of the new high of the renminbi, the key role of Russia in promoting the internationalization of the renminbi, and the challenges that the United States may face.
The renminbi hit a new high
Since the United States and its allies imposed economic sanctions on Russia and excluded it from the SWIFT international payment system, Russia has been looking for new ways to keep foreign trade on track.
In this context, the renminbi has received more and more attention and use as an alternative settlement tool.
The renminbi's share of transactions in Russia's foreign exchange market has continued to rise over the past few months, jumping sharply from 46.6% in February to 53% in March, as reported by Sputnik news agency on April 9.
This change in data is not only a simple numerical change, but also an important symbol of the continuous improvement of the renminbi's position in the global financial system.
After all, the renminbi is stable, and the international recognition is getting higher and higher, so it is natural to use it more.
Let's talk about China's role. As the world's largest exporter, China has close trade ties with many countries.
As more countries begin to accept the renminbi for trading, the international status of the renminbi is becoming more and more stable.
This is not just because of China's economic power, but also because the renminbi is increasingly seen as a reliable currency for trading.
The renminbi's record high in the international market is not just a numbers game, but a subtle but profound change in the world's economic power.
According to relevant data, many countries have begun to use RMB for trade settlement, and this trend is expected to expand further in the future.
The rise of the renminbi will undoubtedly have a profound impact on the global economic map. For the US dollar in particular, its long-standing dominance may be challenged.
However, this does not mean that the dollar will lose its importance, but rather that it will signal a more diversified global monetary system.
With the increasing influence of the renminbi on the international stage, we have reason to expect that in the near future, the renminbi will become one of the world's main means of payment, injecting new vitality into the global economic development.
Russia is indispensable
In recent years, with the changes in the global economic situation and geopolitical turmoil, the renminbi as an international currency has gradually come into people's attention, and its market position has been increasingly enhanced.
In this context, Russia, as a friendly neighbor of China, has played a positive role in promoting the internationalization of the renminbi. It has really made great contributions to promoting the internationalization of the RMB, and can be said to be the "image ambassador" of the RMB.
When it comes to why Russia plays such a big role in this, the first thing to mention is the economic sanctions imposed by the West against Russia.
The sanctions, including kicking Russia out of the international payment system SWIFT, have made it difficult for Russia to use the dollar and euro for international trade. Faced with this situation, Russia has to look for new solutions, and China and the yuan have become one of the best options.
Russia is not just using the renminbi, but promoting the use of the renminbi at the financial, trade and even private levels. Russia has also used its influence among the BRICS countries to push the BRICS countries to use local currencies such as the yuan for settlement.
This not only reduces dependence on the US dollar, but also challenges the dominance of the US dollar in the global financial system.
It is understood that the BRICS countries have begun to explore the use of new settlement methods, in order to further enhance the level of economic cooperation among members. Among them, in particular, Russia, as the rotating chairman, has already put forward relevant plans.
With the rise and development of the world's giant economy, the BRICS, its grand economic power has shocked the international community.
According to the latest data, the BRICS countries, with a population of 3.68 billion, have reached a total economic volume of 29.2 trillion US dollars, showing strong economic competitiveness.
In addition, they plan to join forces with other major economies in the region, such as China, Europe and Asia, to jointly promote the research and development of digital currencies. This initiative is expected to have a significant impact on the existing cross-border payment system.
The BRICS digital currency project aims to build a more secure, efficient and convenient payment network, bringing new vitality to the global financial market. This will not only help improve the efficiency of trade between countries, but also provide strong support for the stable development of the global economy. This will undoubtedly have a major impact on the traditional SWIFT system.
If these countries start to use the renminbi extensively, then there will be significant changes in the global financial markets.
At this stage, despite the challenges facing the Russian economy, dialogue and cooperation with China are stimulating new possibilities.
Russia and China are discussing a loan plan to use the renminbi, and if the relevant agreement is signed, it will help deepen trade relations between the two countries, and at the same time is expected to promote a deep change in international economic and trade rules.
Through these initiatives, Russia and China are jointly contributing to the multipolarization of the world political economy.
In the process, the global hegemony of the dollar is challenged, which could not only change the way international finance works, but also redefine the power structure of the international economy.
The United States may be panicking now
The United States has benefited handsomely from its reliance on the dollar as the world's reserve currency. However, as the renminbi grows stronger, this advantage is under attack.
Some U.S. experts worry that the dollar's global dominance could be jeopardized if the renminbi continues to climb.
The rise of the renminbi is expected to allow more countries to use the renminbi in international trade, thereby reducing their dependence on the US dollar. If this situation develops to a certain extent, the global position of the dollar may indeed be affected.
Although the renminbi's share of global currency reserves is still small, its growth rate and expansion potential cannot be ignored. More importantly, China's important position in global trade provides a solid foundation for the international use of the renminbi.
As China establishes closer economic and trade relations with more countries, the internationalization of the renminbi will be smoother.
With the launch of China's digital currency project, the global influence of the renminbi is expected to further expand.
The move aims to improve the efficiency and security of cross-border payments, and may change the existing payment system. It is worth noting that the project could pose considerable challenges to fintech in the United States.
While the renminbi's rise poses a potential threat to the dollar, it remains elusive given the size of its economy and broad international trust.
The hegemony of the US dollar will not be easily shaken, but the US will undoubtedly need to pay enough attention and coping strategies to this emerging currency competition.
Against this backdrop of shifting global monetary power, U.S. policymakers and economists are closely monitoring the movement of the renminbi.
The United States realizes that maintaining the position of the dollar may require more attention to the adjustment of domestic economic policy, as well as strategic deployment in the international arena.
Ultimately, no matter how far the renminbi's rise goes, it has already begun to change the way the global economy and financial markets operate. For the United States, this is not only a challenge, but also an opportunity to maintain its leadership in the global economy while navigating the changes brought about by emerging markets.
For the rest of the world, the rise of the renminbi offers the possibility of diversifying currency options, which is a positive boost to international trade and economic development.
In short, the renminbi's record high and its performance in the international market are gradually rewriting the geopolitical landscape of global currencies, a change that has far-reaching implications for all countries. The United States may need to think carefully about how to maintain its strong fiscal and monetary position in this volatile global economic environment.
References:
"Central Bank of Russia: Renminbi, hit a record high" Global Times