Is there a situation more absurd than two of the world’s most dollar-dependent economies promising to free themselves from the exorbitant burden of the dollar?
The Chinese yuan rose recently after Dow Jones reported that Saudi Arabia was in talks with Beijing to price some of its oil sales in that currency, instead of the greenback. At a time when the world appears to be splitting into rival democratic and authoritarian blocs, it’s inevitable that the perennial chatter about the yuan challenging the dollar’s status as the world’s reserve currency should be revived. Such talk has always been fanciful — but it’s even more unlikely right now.
Let’s set aside, for the moment, the fact that there is no sign of the yuan reaching the status of even the Swiss Franc as a medium of exchange, let alone the mighty greenback. Dollars were used for 88% of foreign exchange transactions in 2019, compared to just 4.3% for the yuan.