The foreign trade settlement in 29 countries around the world uses CNY! The foreign trade market may not be affected by the exchange rate!

Not long ago, Ren Zeping, the current chief economist of Soochow Securities, pointed out that countries around the world should prevent the United States from “fleecing of the stock” in the global stubble field through currency release and the devaluation of the dollar.  Faced with the irresponsible over-issuance of the U.S. dollar, he suggested that countries should reduce their holdings of U.S. dollar assets and resist U.S. dollar hegemony.

It can be said that due to the continuous overdraft of U.S. dollar credit, many countries around the world have successively begun the process of "de-dollarization", and reducing the holding of U.S. dollars in foreign exchange reserves is also one of the methods.

According to the latest report on April 1, the latest data released by the International Monetary Fund (IMF) shows that the share of the US dollar in global foreign exchange reserves in the fourth quarter of 2020 has fallen to its lowest level in nearly 25 years (1995).

• The U.S. dollar's share of global foreign exchange reserves plummeted by 30%

Specifically, the U.S. dollar accounted for 59% of foreign exchange reserves, which has fallen for three consecutive quarters. In contrast, between 1977 and 1991, U.S. dollar assets accounted for 85% of global foreign exchange reserves.  The decline has now reached about 30%.

Global foreign exchange reserves are assets held by central banks in different currencies. In this report, the proportion of non-US dollar currencies has increased, with the proportion of euros rising to 21.2%, the highest level since 2014.

At the same time, the scale of RMB reserves has continued to rise.  Data show that the total foreign exchange reserves of CNY in the fourth quarter of last year was 267.52 billion U.S. dollars, and its share of global foreign exchange reserves rose to 2.25%, increasing for four consecutive quarters.

• 29 countries around the world use CNY for foreign trade settlement

Recently, China and Iran signed a 25-year cooperation agreement, stipulating that the two sides' oil trade should be settled in CNY.

After that, our country and the UAE reached more settlement agreements in local currency, and the two sides used CNY for settlement in oil trade. We use CNY for settlement in trade with other countries is not only conducive to reducing the risk of being sanctioned by the United States, but also conducive to the internationalization of CNY.

Besides Iran and the UAE, Russia currently also uses CNY to settle oil trade.

The proportion of China-Russian trade settled in US dollars has dropped from 90% in 2015 to less than 30% at present. In the future, local currency settlement will be expanded. In fact, this is "de-dollarization".

In fact, when the status of the US dollar is "toddling", more and more countries have joined the trend of "de-dollarization".

According to relevant media statistics, as of now, at least 53 countries including Germany, the United Kingdom, Japan, Vietnam, Singapore, and Canada have begun to decentralize the U.S. dollar in different ways. The main methods include expanding local currency settlement, reducing the use of U.S. dollar assets, and optimizing the structure of foreign exchange reserves.  Increase gold reserves, etc.

It is worth mentioning that with the steady development of my country's import and export trade, various trading partners may also increase their holdings of CNY when conducting trade settlement with my country.

Statistics show that 29 countries, including Russia, Iran, Turkey and Venezuela, have gradually switched to the use of CNY in trade settlement or investment.

With the steady development of China's import and export trade, various trading partners may increase their holdings of CNY when making trade settlements with us.  Switching to the use of RMB in trade settlement or investment is of great benefit to those who do related foreign trade work.