The US dollar has many foes, and its competitors are now on a path to derail its global reserve status. Several economic uncertainties have led the US dollar to plummet as of late, primarily as Trump’s rapid tariff hikes sabotaged the US dollar’s prestige and global positioning. Coupled with rising geopolitical tensions and narratives, the DXY index had briefly touched 96, one of its lowest points recently, showcasing investors’ decreasing interest in the USD. In its wake, a new development has been catching pace as of late, with China stating that it doesn’t want the world to rely on a singular currency for trade. Why is China saying so? Let’s find out.

Also Read: US Dollar Forecast: Index Rebounds 1% But Fed, Data Risks Loom

Analyst Breaks Down China’s Recent Financial Call

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A noteworthy handle on X, China Banking News recently decoded how China is secretly vying for the US dollar to fall. In its latest post, the governor of the People’s Bank of China, Pan Gongsheng, has voiced a new narrative for the world to follow. This narrative includes embracing the multipolar currency system, where a plethora of new currencies can be explored by nations across the world.

Gongsheng later shared a stark opinion, adding how the world should not depend on a singular currency for trade. He later stated how the world should adopt the multipolar currency narrative, where a strong number of sovereign currencies can engage in healthy competition.

“China’s central bank chief just said he wants to end the US dollar’s global dominance. He DOESN’T want the Chinese yuan to replace the greenback, however. Beijing has another plan, which involves working closely with the IMF…. In a pointed dig at the US dollar’s dominance of the global monetary system, Pan called for the world to “weaken excessive dependence on a single sovereign currency and its negative effects.”

Why Should The World Adopt A Multipolar Currency Approach?

PBOC chief later clarified how this system can help “preserve global economic and financial stability.”

“The multipolarized development of the international currency system will help to raise its resilience and more effectively preserve global economic and financial stability,” Pan said.

In addition to this, China has also been diversifying away from the USD as of late.

“China is diversifying its currency reserves out of the US dollar. The share of US Treasury holdings in total Chinese FX reserves has declined by ~15 percentage points since 2016, to ~22%, near the lowest in at least 15 years. Over the same period, gold’s share has risen ~5 percentage points, to a record 6.8%. This trend accelerated in 2022, and since then, gold’s share of Chinese reserves has doubled. Over this time, China has acquired ~200 tons of gold. Gold is more desired than ever.”

However, Gongsheng does not intend to put Yuan in the center, considering its smaller market portion. He is simply propagating a new currency order where all sovereign currencies can coexist and evolve at the same time.

USD Is Plunging At A Rapid Pace

The US economic developments, coupled with Trump’s aggressive tariff regimens, have taken a toll on the US dollar. The dollar has plunged dramatically over the next few months, with Bloomberg predicting the currency to shed 10% in the next 12 months.

Also Read: Currency News: Chinese Yuan Emerges as Top Threat to US Dollar Power

  • china
  • Chinese Yuan
  • De-dollarization
  • US DOLLAR