(ATF) China proudly announced that 29 countries support the yuan as the US dollar has been "abandoned" – after a recent IMF report showed the US share of global foreign exchange reserves has plunged by 26%.
Not long ago, Ren Zeping, the current chief economist of Soochow (Suzhou) Securities, pointed out that countries around the world should prevent the United States from “shearing wool” in the global finance field through currency release and devaluation of the dollar.
Facing irresponsible over-issuance of the US dollar, Ren suggested to Golden 10 Data that countries should reduce their holdings of US dollar assets and resist US dollar 'hegemony'.
He is of the opinion that continuous QE – quantitive easing – has created excess credit of the US dollar, such that many countries around the world have successively begun a process of "de-dollarization", to reduce their holding of US dollars in foreign exchange reserves.
According to a report on April 1, the International Monetary Fund (IMF)'s latest data shows that in 2020 the dollar's share, in the fourth quarter's global foreign exchange reserves, had dropped to levels of nearly 25 years ago (1995).
Specifically, the US dollar accounted for 59% of foreign exchange reserves, after fallin for three consecutive quarters. In contrast, between 1977 and 1991, US dollar assets accounted for 85% of global foreign exchange reserves. That is a decline of about 26%.
Global foreign exchange reserves are assets are held by central banks in different currencies. In this report, the proportion of non-US dollar currencies has increased, with the proportion of euros has risen to 21.2%, the highest level since 2014.
At the same time, the scale of yuan reserves has continued to rise. In the fourth quarter of last year, total foreign exchange reserves held in yuan were worth some $267.52 billion. That meant the Chinese currency's proportion of the world's foreign exchange reserves rose to 2.25%, after increasing for four consecutive quarters.
It is worth mentioning that with steady development of yuan import and export trade, various trading partners may also increase their holdings of yuan when conducting trade settlement with China.
Statistics show that 29 countries including Russia, Iran, Turkey, and Venezuela have gradually switched to use of yuan in trade settlement or investment.