Wednesday, August 29, 2018

Vietnam the next country to join the de-dollarization movement as it will allow direct bi-lateral trade with the Chinese Yuan

On Aug. 29, the country of Vietnam became the latest economy to join in the ongoing de-dollarization by announcing they will begin direct bi-lateral trade with China using the Yuan in certain areas.


Vietnam plans to officially allow the use of the Chinese yuan for trading goods in its northern border towns, the central bank said on Wednesday. 
The State Bank of Vietnam announced on its website that merchants, residents and related banks and institutions engaged in cross-border trade will be authorized to use the yuan, or the Vietnamese dong, to settle transactions starting on Oct. 12. 
The central bank did not provide further details, but many economists see the decision as an attempt to reduce foreign exchange risks from current trading practices. 
Trade between Vietnam and China exceeds $100 billion, and most transactions are settled in U.S. dollars. This creates a forex hazard for both sides. – Nikkei Asia Review
De-dollarization, or trading directly with one's own currency, began in earnest in 2013 when Russia and China agreed to use the Yuan instead of the dollar in an energy agreement.  However this paradigm of bi-lateral trade has accelerated here in 2018 thanks to Trump's global trade war, and the Fed's raising of interest rates on the reserve currency. 

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