China's Central Bank Ditches US Dollar: An Impact on Crypto?

• China's Reactions to Moody's Negative Yuan Rating
• BRICS' China: Strategic Forex Sell-Off
• BRICS: US Dollar Under Siege
• Implications for the US and Africa

China's Reactions to Moody's Negative Yuan Rating

Amid the backdrop of three consecutive days in December, China's Central Bank made waves in the currency market by divesting from the US dollar. This decision came in response to the rating agency Moody's downgrade of the Chinese Yuan's outlook to negative, a move that did not sit well with the Chinese economy. As a BRICS member, China responded by offloading the US dollar in an effort to prevent the Chinese Yuan from depreciating.

BRICS' China: Strategic Forex Sell-Off

The Chinese divestment from the US dollar in the currency market was observed for three consecutive days from December 5 to 8. While the first two days saw an aggressive sell-off, the action on Wednesday was relatively modest, as reported by Reuters. Following the dollar drop, state-run banks were observed to be acquiring the Chinese Yuan in the spot foreign exchange market. This strategic countermove aims to position the Chinese Yuan favorably against the US dollar. In pursuit of this objective, BRICS member China is employing every available strategy to keep the Chinese Yuan competitive in the markets.

BRICS: US Dollar Under Siege

The US dollar is increasingly finding itself the primary target of both Chinese and BRICS offensives. The BRICS alliance is embarking on a mission to dismantle US dollar supremacy and supplant it with local currencies. Despite already making notable progress towards this goal, there's still quite a way to go to truly challenge the dominance of the US dollar.

Implications for the US and Africa

This development could potentially destabilize the US financial market. Meanwhile, China is making strides to persuade African nations to abandon the US dollar in favor of conducting cross-border transactions in the Chinese Yuan. A few African countries are currently contemplating this proposal, potentially embracing China's vision to reduce their reliance on the US dollar in their domestic economies.

Edited by Jonathan Stoker