Is China avoiding using US dollars?
In the wake of recent statements by Chinese officials about the dollar and dollar assets (see our previous comments here, here and here), it does seem like the Chinese are avoiding dolar-based transactions:
China and Argentina have made a tentative agreement to swap $10bn (£7bn) worth of their currencies.
The move, which allows both countries to bypass the US dollar, makes it easier for Argentine businesses to buy Chinese imports directly in yuan.
It also gives Argentina hard cash at a time when its finances have been hurt by the global financial crisis.
The deal comes after China suggested that the world should create a new reserve currency to replace the dollar.
The swap is being seen as a sign of China’s ambitions in South America.
China primarily imports agricultural products from Argentina, while the South American nation buys Chinese electronic goods.
In the past, China has signed similar deals with South Korea, Malaysia, Belarus and Indonesia.
I don’t see the dollar being replaced any time soon as the world reserve currency. But do China’s actions suggest it is slowly shifting away from dollars?
China and Argentina in $10bn deal – BBC News