China takes new measure to promote de-dollarization
The Chinese authorities have extended trading hours for the onshore yuan as part of the state goal to broaden cross-border use of the national currency and boost yuan trading activity, Bloomberg reports.
Starting January 1, trading hours for the onshore yuan have increased so that foreign-exchange transactions are now possible until 3am in Beijing instead of the 11:30pm cutoff that had been in place formerly. The step takes trading into the European evening and deeper into the US day.
The measure bolsters Beijing’s previous initiatives aimed at promoting the use of the Chinese national currency in transactions with major energy exporters and commodity supplies. Last month, President Xi Jinping confirmed that Beijing was ready to make energy purchases in yuan instead of the US dollar with the member states of the Gulf Cooperation Council (GCC).
While opening up the markets has been on Beijing’s agenda for some time, growing tensions with Washington over a wide range of issues from Taiwan and Russia to semi-conductor technology and free trade have caused growing concerns over the potential use of the US dollar as an economic weapon against China.
The nation’s attempts to ditch the greenback in international trade have also intensified against the backdrop of the sweeping sanctions introduced by Western nations against Russia, one of the world’s major energy producers and exporters.
“Beijing is trying hard to keep the yuan relevant as an international currency to counter recent geopolitical tensions and hostile sentiments, especially in the US,” Stephen Jen, the chief executive officer of London-based hedge fund Eurizon SLJ Capital, told Bloomberg.
The yuan rallied to the strongest level in four months after China announced the planned trading hour extension. The currency has advanced since November, as global investors bet on China’s economic recovery following the drop of its zero-Covid policy.
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