Are We Seeing a Shift Away From the USD?

In March and April 2023, China’s outbound payments were made predominately in Renminbi (RMB), a first for the currency.

48.5% of outbound payments were made in RMB compared to 45.2% in USD in April. This is a remarkable shift considering that in 2010 the local currency accounted for only 0.5% of outbound payments. The RMB is catching up in inbound payments too, representing 47.8% of payments while USD accounts for 48.2%.

China has been promoting its currency to increase its influence around the world. Other developing countries have bemoaned the use of the USD as the world’s reserve currency, while BRICS nations are discussing initiating a new currency for their use, an initiative that has in fact been around for a number of years.

What effect will a de-dollarised world have on the stability of the price of goods such as oil? The dollar is accepted worldwide and is used on the ground, unofficially, in many developing countries. SWIFT has calculated that 83.7% of trade is done in USD; at the moment the RMB only accounts for 4.5%. There is still a long way to go if China wants its currency to be the global reserve currency.

Nevertheless, international businesses should be aware of different payment options to facilitate efficient trade, especially in some developing countries where getting “hard” cash out of the country can prove to be difficult.