Why are so many countries all of a sudden turning to the yuan to buy their essential commodities?
Why is the world de-dollarizing so quickly?
Simple — the Russian sanctions.
1/11
— Gonzalo Lira (@GonzaloLira1968) March 30, 2023
First, the sanctions disconnected Russia from SWIFT, meaning Russians can’t pay for things they would want to buy with dollars.
So why would Russia take dollars for their commodities — if they can’t buy stuff with those dollars.
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— Gonzalo Lira (@GonzaloLira1968) March 30, 2023
But Russia still has to trade, because it still has to acquire things it cannot produce at home, and still has a surplus of commodities with which to acquire these foreign goods.
Apart from the West, Russia’s major trading partners are China and India.
5/
— Gonzalo Lira (@GonzaloLira1968) March 30, 2023
They’re getting ahead of the curve.
As more commodities trading takes place in yuan and rupees, the more demand for those currencies. Hence it becomes smart to cut a deal with China NOW — to fix an exchange rate of yuan.
In essence, these deals are longs on the yuan.
7/
— Gonzalo Lira (@GonzaloLira1968) March 30, 2023
All this leads to the collapse of the dollar into hyperinflation.
The dollar was valuable BECAUSE it was the currency in international commodities trade, which created the demand for dollars and dollar assets outside the US — thereby financing the enormous American debts.
9/
— Gonzalo Lira (@GonzaloLira1968) March 30, 2023
BTW, Russia didn’t cause this. The sanctions which triggered this worldwide de-dollarization was just the final straw.
It didn’t help that American leadership seems capricious and hysterical, making other countries very nervous that they might be sanctioned too.
11/11
— Gonzalo Lira (@GonzaloLira1968) March 30, 2023
Kenyan President Ruto warns not to bet on the dollar:
‘This (dollar) market is going to be different in a couple of weeks’ pic.twitter.com/6Nk3oeoe9P
— Willem Middelkoop (@wmiddelkoop) March 30, 2023
China and Brazil recently reached an agreement to reject the use of the US dollar in their mutual trade and settlements, opting instead for their own national currencies.
🇺🇸This move comes as China has been Brazil's primary trading partner since 2009. Additionally, Saudi Arabia… pic.twitter.com/YKpj6am2re
— Russian Market (@runews) March 30, 2023
https://twitter.com/burningplat/status/1641385112339197952
China is aligning with some of the most powerful countries in the world and turning them against America while our leaders are focused on climate change and transgenderism pic.twitter.com/V2fUpAkwrN
— Greg Price (@greg_price11) March 30, 2023
The BRICS Reset https://t.co/bfaMlK6hvp
— Willem Middelkoop (@wmiddelkoop) March 30, 2023