Chinese banks have helped clients offload overseas currencies worth $51.8 billion, the highest since 2020. BRICS member China is at the forefront of the US dollar sell-off, as optimism grows towards the Chinese yuan, reported Bloomberg. The lenders have sold a net $51.8 billion of foreign exchange on behalf of their customers in September. That’s the largest amount ever recorded since December 2020. The clients include importers, exporters, and other investors in overseas financial assets.

The chart below shows a spike in currency conversion amid robust export growth in September. The move helped offset an outflow from securities investment, as foreign institutions continued to cut onshore bond holdings. BRICS member China and the Chinese yuan are gaining an upper hand against the US dollar amid trade tensions.

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Chinese Firms Dump US Dollar For Chinese Yuan, Giving BRICS a Boost in the Arm

The Chinese firms are bullish on the Chinese yuan as the BRICS nation is aiming to internationalize the currency. “The net surplus in FX settlement indicates that inflows into China were picking up, helping to support the yuan, while exporter conversion has also accelerated,” said Khoon Goh, Head of Asia Research at ANZ Bank.

The People’s Bank of China took measures to keep the yuan’s daily reference rate at its strongest in a month. The PBOC stepped up the move after US President Donald Trump imposed tariffs on China and other countries in early October. BRICS banded together, showing dissatisfaction against the US and the dollar, and came forward to support local currencies, especially the Chinese yuan.

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The renewed trade tensions could lead to many more foreign exchange conversions by local exporters to support the yuan. The development gives BRICS a boost in the arm as the dollar will be offloaded in support of the yuan.