Chinese Yuan is a challenge to the US dollar, warns economist Nouriel Ro

London: According to economist Nouriel Roubini, the Chinese Yuan will threaten the importance of the US dollar as an international currency. The Chinese Yuan will also become an international currency in the future. He predicts the end of the monopoly and domination of the US dollar as an international currency. In the future, the world will be partitioned using two currencies for the next decade. He states that the policies of the US to use the dollar as a weapon for national security benefits China.

Moreover, Nouriel Roubini is a well-known economist, also known as Dr Doom, for his prediction of the 2008 recession in the US. In a recent article for a British newspaper, Roubini warned about the future of the US dollar as an international currency as the Chinese Yuan would likely replace the US dollar. However, Roubini warned that the transition would not be easy as he pointed out flaws in the Chinese monetary system and policies. Suppose China does not transparently disclose information about the government’s control and fails to adopt a flexible policy on exchange rates. In that case, the Yuan will not be accepted as an international currency.

However, Nouriel Roubini made it clear that all the things which stand against the Yuan from becoming an international currency would be overcome due to the current US policies. The US policy of using the dollar as a weapon to impose sanctions against their enemies will backfire, as powerful countries like Russia, Iran and North Korea would look at alternatives. Hence the dollar may soon lose its significance to the Chinese Yuan.

Some emerging countries would prefer using the Chinese Yuan over the US dollar, and importantly after realising that the Yuan can buy oil. This has significantly changed the dynamics of international currencies.

Currently, there is news that Saudi Arabia is discussing with China trading oil in Yuan. If this happens, then it’s a huge blow to the US Petro-Dollar. The term Petro-dollar was used as the US dollar was essentially recognised globally as a currency to purchase oil. The Chinese Yuan threatens this position of the US dollar. Previously the IMF has warned about the US dollar losing its importance. Many economists in the US have agreed and are warning that using the US dollar as a weapon is backfiring.