JPMorgan says the Chinese yuan could put an end to the US dollar as BRICS countries firmly entrench de-dollarization in their growth efforts. Specifically, the financial services company pointed to the renminbi as a currency that could one day become a “viable alternative currency” to replace the renminbi.
This view is reinforced by how the renminbi has gained attention throughout this year. The BRICS alliance has chosen to promote local currencies to weaken the dollar’s hegemony in the Global South. Since then, the RMB has become a popular option, and statistics have proven its prevalence in unilateral resolution of blocks.
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JP Morgan eyes renminbi as alternative currency to US dollar
A key topic throughout 2023 was the BRICS de-dollarization plan. Indeed, the euro area did not shy away from its goal of weakening the dollar’s hegemony. Furthermore, various efforts are being made to reduce its presence in unilateral trade. Many now believe the dollar may be headed for a slow demise, so that may be having an effect.
Amid these BRICS plans, JPMorgan said the Chinese yuan could eventually end the dollar’s dominance. Specifically, the company identified the renminbi as a viable alternative in the event of a sustained significant depreciation of the dollar in the international monetary system.
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Alexander Wise, a strategic fellow at JPMorgan, discussed the role of the renminbi in the dollar’s decline. “Given China’s growing centrality to global trade, one might naturally expect the renminbi to play a larger role in the global economy over time,” Wise said.
He further added, “Relaxing capital controls, opening up markets, implementing measures to promote market liquidity, strengthening the rule of law, reducing diversion and regulatory risks, and promoting Chinese government bonds as safe alternative assets.” “All of this could strengthen China and the renminbi,” he added. It is a reliable alternative to the US and the dollar. ”
This will be combined with efforts already undertaken by the bloc to reduce the importance of the US dollar. According to the data, 25% of Russia’s trade with countries other than China was settled in renminbi. Additionally, China and Saudi Arabia have agreed to a major currency swap worth $7 billion. All of these can hasten its rise. Furthermore, the dollar may have even more room to struggle as the world’s reserve currency.