In recent years, most of the global trade has been settled in US dollars, but with the continuous collapse of the US dollar and more and more sanctions, more and more countries have turned to RMB for settlement.
Statistics show that currently 30 countries including Russia, Iran, the United Arab Emirates, Dubai, India, Singapore, Venezuela, Turkey, and Indonesia have gradually switched to using RMB in trade settlement or investment.
Russia has recently announced that it will readjust the allocation of foreign exchange reserves, especially to empty the euro reserves, and determine that the renminbi will be the only foreign exchange reserve in subsequent foreign trade. Russia's choice of RMB as its sole foreign exchange reserve fully demonstrates the obvious improvement of China's economic and trade status in the world, and the RMB has been supported and recognized by more and more countries around the world.
Brazil is the largest country in Latin America. In early February, the People's Bank of China and the National Bank of Brazil signed a memorandum to establish a RMB settlement center in Brazil. In the future, trade between China and Brazil will be settled in RMB. This means that our RMB internationalization has taken another solid step. This move is beneficial for Chinese and Pakistani enterprises and financial institutions to use RMB for cross-border transactions, making bilateral trade and investment more convenient.
Iranian President Rahim, who just came to China for a visit, also discussed with China the issue of increasing the share of local currency settlement. Iranian Economy Minister Handouzi said that in the trade between China and Iran, RMB has already accounted for a considerable proportion, and now they are negotiating how to relax the use of RMB. As of January 2023, in the past two years, more than 26 million tons of Iranian oil have been shipped to China, and the renminbi is the main common currency in transactions.
In terms of reserve function, the renminbi has also gained wider recognition. In May last year, the International Monetary Fund (IMF) raised the weight of the RMB from 10.92% to 12.28% in the five-year review of the Special Drawing Rights (SDR) valuation, maintaining its third place in the currency basket, second only to in dollars and euros.
Statistics show that in recent years, under the active promotion of relevant departments, the scale of cross-border RMB use has steadily increased. In 2022, the cross-border RMB settlement amount of trade in goods will be 7.92 trillion yuan, a year-on-year increase of 37.3%, and the cross-border RMB settlement amount of direct investment will be 6.76 trillion yuan, a year-on-year increase of 16.6%.
According to SWIFT statistics, in December 2022, the RMB will rank third in the global cross-border trade volume, accounting for 3.91%, which is nearly twice that of the same period in 2021, second only to the US dollar and the euro.
China's import and export trade will usher in more trade opportunities on the world stage under the premise that more and more countries and regions "center on RMB settlement".
For foreign traders, the most direct and main benefit of receiving payment in cross-border RMB is the ability to avoid exchange rate risks. In the current general environment where RMB appreciation is generally predicted, hedging risks through cross-border RMB has become more important.
Another advantage of using cross-border RMB is that cross-border RMB can save exchange costs and trade financing costs, thereby reducing financial costs. For example, if you do business with countries such as Indonesia, Thailand, Myanmar, Argentina, Cambodia, etc., if you quote in US dollars, the exchange rate difference in a single transaction is indispensable, because there are differences between the exchange rates announced by the central banks of these countries, the exchange rates announced by the customs, and the private exchange rates. of.
SUNPASS has Nearly 50 years of production and export experience. SUNPASS are Serving over 35 world famous companies. SUNPASS has recently settled transactions with Indian companies in RMB. The whole transaction process is very convenient. SUNPASS hopes to cooperate with more companies in different countries. SUNPASS is a specialized manufacturer of Sealing and Thermal Insulation products (such as: Gland Packing, Sealing Yarns, Graphite products, PTFE products, Rubber products, Ceramic fiber products, Fiberglass products etc. ) for about 50 years.
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