https://thecradle.co/articles/de-dollarization-gains-momentum-in-asian-markets
De-dollarization 'gains momentum' in Asian markets
De-dollarization 'gains momentum' in Asian markets
The ASEAN+3 bloc of nations approved a landmark financial assistance mechanism this week that ditches the greenback for the yuan and other regional currencies
The ASEAN+3 bloc of nations approved a landmark financial assistance mechanism this week that ditches the greenback for the yuan and other regional currencies
News Desk 5/9/25
Banks and financial brokers are increasingly seeking to bypass the US dollar and are receiving more requests for currencies such as the yuan, the Hong Kong dollar, the Emirati dirham, and the euro, according to a report published by Bloomberg on 9 May.
“Financial institutions from Europe and elsewhere are increasingly pitching yuan derivatives that cut out the US currency," the report cites sources at a commodities trading firm in Singapore as saying.
A trader at a Singapore financial institution noted that “European carmakers are driving up demand for euro-yuan hedges.” Meanwhile, a foreign bank in Indonesia formed “a dedicated team in Jakarta this year to meet growing demand from local clients to facilitate rupiah-yuan transactions.”
The search for alternatives comes as the greenback faced heavy selling this week amid changing trade deal expectations, while the Taiwan dollar surged more than 5 percent in a single day, marking its largest jump since 1988.
Stephen Jen, chief executive and co-chief investment officer of Eurizon SLJ Capital, told Market Watch this week that the sudden spike in the value of the Taiwan dollar and other Asian currencies could signal a larger selloff in the greenback.
“We continue to believe the risks of investors being blindsided by such a non-linear sell-off in the dollar continue to rise. The sharp sell-off in [the Taiwan dollar] last week is such an example. There will be others, we predict,” Jen and co-author Joana Freire said in a report.
The financial experts revealed that the pile of “at-risk dollars” held by China, Taiwan, Malaysia, Vietnam, and other major Asian nations recently topped $2.5 trillion, warning that if local exporters begin unloading their holdings, “it could cause the buck to weaken substantially,” in a looming crisis they say is compounded “by the fact that these market participants know the dollar is overvalued.”
Over the past several years, Asian nations have steadily moved toward de-dollarizingtheir trade in response to Washington's repeated use of its currency as a tool of economic coercion.
On Sunday, finance ministers and central bank governors from the Asean+3 nations approved a new mechanism designed to offer quick financial assistance to economies experiencing urgent balance-of-payments challenges, known as the Chiang Mai Initiative Multilateralisation (CMIM) Rapid Financing Facility.
Notably, unlike previous mechanisms that relied on the US dollar, the CMIM Rapid Financing Facility will use the Chinese yuan and other regional currencies.
The decision was made a few days before it was revealed that China’s exports surged in April, despite the massive tariffs imposed by US President Donald Trump.
The ASEAN+3 bloc of nations approved a landmark financial assistance mechanism this week that ditches the greenback for the yuan and other regional currencies
News Desk 5/9/25
Banks and financial brokers are increasingly seeking to bypass the US dollar and are receiving more requests for currencies such as the yuan, the Hong Kong dollar, the Emirati dirham, and the euro, according to a report published by Bloomberg on 9 May.
“Financial institutions from Europe and elsewhere are increasingly pitching yuan derivatives that cut out the US currency," the report cites sources at a commodities trading firm in Singapore as saying.
A trader at a Singapore financial institution noted that “European carmakers are driving up demand for euro-yuan hedges.” Meanwhile, a foreign bank in Indonesia formed “a dedicated team in Jakarta this year to meet growing demand from local clients to facilitate rupiah-yuan transactions.”
The search for alternatives comes as the greenback faced heavy selling this week amid changing trade deal expectations, while the Taiwan dollar surged more than 5 percent in a single day, marking its largest jump since 1988.
Stephen Jen, chief executive and co-chief investment officer of Eurizon SLJ Capital, told Market Watch this week that the sudden spike in the value of the Taiwan dollar and other Asian currencies could signal a larger selloff in the greenback.
“We continue to believe the risks of investors being blindsided by such a non-linear sell-off in the dollar continue to rise. The sharp sell-off in [the Taiwan dollar] last week is such an example. There will be others, we predict,” Jen and co-author Joana Freire said in a report.
The financial experts revealed that the pile of “at-risk dollars” held by China, Taiwan, Malaysia, Vietnam, and other major Asian nations recently topped $2.5 trillion, warning that if local exporters begin unloading their holdings, “it could cause the buck to weaken substantially,” in a looming crisis they say is compounded “by the fact that these market participants know the dollar is overvalued.”
Over the past several years, Asian nations have steadily moved toward de-dollarizingtheir trade in response to Washington's repeated use of its currency as a tool of economic coercion.
On Sunday, finance ministers and central bank governors from the Asean+3 nations approved a new mechanism designed to offer quick financial assistance to economies experiencing urgent balance-of-payments challenges, known as the Chiang Mai Initiative Multilateralisation (CMIM) Rapid Financing Facility.
Notably, unlike previous mechanisms that relied on the US dollar, the CMIM Rapid Financing Facility will use the Chinese yuan and other regional currencies.
The decision was made a few days before it was revealed that China’s exports surged in April, despite the massive tariffs imposed by US President Donald Trump.