You can add Iraq to the list of countries at least considering dumping the U.S. dollar for the Chinese yuan.
Iraq’s central bank is poised to permit trade with China to be settled in yuan rather than dollars, Reuters reported.
The Iraqi central bank announced last week that it intends to allow transactions in the Chinese currency to increase the balances of Iraqi financial institutions with accounts with Chinese banks.
“It is the first time imports would be financed from China in yuan, as Iraqi imports from China have been financed in (US) dollars only,” Mudhir Salih, the government’s economic adviser, told Reuters.
More from the newswire:
“The central bank has been taking urgent steps to compensate for a dollar shortage in local markets, which prompted the cabinet to approve a currency revaluation earlier this month.
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The move is the latest sign of the yuan’s growing role on the international stage as China gradually opens up its financial markets and some countries look to diversify their currency exposures.
The central bank could, as part of its plan, boost the balances of Iraqi banks that have accounts with Chinese banks in yuan, it said in a statement.
Another option would be to boost local banks’ balances via the central bank’s accounts with JP Morgan and Development Bank of Singapore (DBS), it added.
The first option would depend on the central bank’s yuan reserves, while the other would use the bank’s U.S. dollar reserves at JP Morgan and DBS. The two banks would convert the dollars to yuan and pay the final beneficiary in China, Salih explained.”
The dollar’s downfall is nigh.
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