- China Prepares Death Blow to the Dollar
China is One Signature Away From Dealing the Dollar a Death Blow
… on March 26 China is set to become the intruder that may very well deal a death blow to the dollar.
China Prepares Death Blow to the Dollar
On March 26 China will finally launch a yuan-dominated oil futures contract. Over the last decade there have been a number of “false-starts,” but this time the contract has gotten approval from China’s State Council.
With that approval, the “petroyuan” will become real and China will set out to challenge the “petrodollar” for dominance. Adam Levinson, managing partner and chief investment officer at hedge fund manager Graticule Asset Management Asia (GAMA), already warned last year that China launching a yuan-denominated oil futures contract will shock those investors who have not been paying attention.
This could be a death blow for an already weakening U.S. dollar, and the rise of the yuan as the dominant world currency. But this isn’t just some slow, news day “fad” that will fizzle in a few days.
A Warning for Investors Since 2015
Back in 2015, the first of a number of strikes against the petrodollar was dealt by China. Gazprom Neft, the third-largest oil producer in Russia, decided to move away from the dollar and towards the yuan and other Asian currencies.
Iran followed suit the same year, using the yuan with a host of other foreign currencies in trade, including Iranian oil. During the same year China also developed its Silk Road, while the yuan was beginning to establish more dominance in the European markets. But the U.S. petrodollar still had a fighting chance in 2015 because China’s oil imports were all over the place. Back then, Nick Cunningham of OilPrice.com wrote…