Yet another sign that China’s yuan is on the rise. Here’s the latest nail in the U.S. dollar coffin with the ongoing shift from West to East…
from Zero Hedge
In a sign the currency’s status in international finance is on the rise, and just a few short weeks after China unveiled its Yuan-denominated oil futures contract, the CEO of the London Metal Exchange has confirmed that it is planning to introduce yuan-denominated metal products.
As we noted recently, interest in China’s yuan-denominated oil futures contract has soared since inception…the share of yuan contracts in global trading jumped to 12% compared to eight percent in March and 14% of WTI volume, up from 2% in April.
“The contract is thundering into action,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore, as quoted by Reuters.
“It makes sense for Iran to begin selling oil under contracts denominated in yuan rather than dollars.”
Which could explain why, as The South China Morning Post reports, LME CEO Matthew Chamberlain said in an interview in Hong Kong…
“At present, investors are trading our products in US dollars. We would definitely like to explore the possibility of launching products denominated in offshore renminbi,”
The LME, owned by Hong Kong Exchanges and Clearing (HKEX), already allows traders to use the Chinese currency as collateral. HKEX last July has also introduced yuan-denominated gold futures.
Chamberlain could not say when the new products will be launched but he is confident yuan-denominated products would be popular because the currency has become more widely use in global finance.
“Chinese investors are definitely very active customers at the LME. They are trading through mainland brokers who are members of the LME or western firms.”
“We believe with the increasing number of Chinese trading in our market, there would be more Chinese companies wishing to join the LME.”
Additionally, International Finance reports that Gary Cheung, chairman of the Hong Kong Securities Association, said:
“Allowing Chinese manufacturers and investors to trade in yuan instead of the US dollar would reduce their currency risk. If the LME wants to attract more Chinese investors to its market, it makes perfect sense for it to launch the yuan metal contracts.”
Is the tide turning on the USDollar’s reserve status? Remember, nothing lasts forever…
Even The World Bank’s former chief economist wants to replace the US dollar with a single global super-currency, saying it will create a more stable global financial system.
“The dominance of the greenback is the root cause of global financial and economic crises,” Justin Yifu Lin told Bruegel, a Brussels-based policy-research think tank. “The solution to this is to replace the national currency with a global currency.”