HONG KONG: The yuan is at its highest in more than a year, but China’s efforts to internationalise it remain in their infancy.
AXA Framlington Asia’s Mark Tinker, however, has identified one area where it’ll provide an alternative to the dollar.
China’s pricing of assets in yuan – coupled with the Hong Kong Stock Exchange’s plan to sell physical gold contracts priced in the currency – will create a system where countries can sidestep the US banking system, Tinker said in an Aug 30 note.
“Having accepted payment for oil or gas in yuan, the seller, be it Russia or Saudi Arabia or anyone else for that matter, does not have to worry about having excess yuan, they can simply trade it back into gold,” Tinker said.
“We are moving to a multi-polar world.”
It’s still some way off though – the yuan accounted for just 2% of Swift global payments in July. — Bloomberg