Is the Yuan set to replace the U.S. Dollar as the world’s reserve currency?
Time will tell, shortly! The Yuan looks as though it will be moved to an international reserve currency, or part of a basket of currencies some time after 2010. Two factors will come together to make this happen. The timetable that the Chinese use for reducing their dollar holdings and the I.M.F. schedule for the review of the composition of the S.D.R. in 2010. In order for this to work, the Yuan must have a heavy presence in international markets by that then. China will release huge amounts of the Yuan into international markets between now and the end of 2010. By selling the cheapest and most sought after manufactured goods in the world, Chinese products will continue to grow in the world markets and as a result, it will be easier to demand payment in Yuan. Until the rest of the world’s manufacturers can produce goods as cheaply as China, this juggernaut will roll on and set the foundation for the Yuan to become the world’s reserve currency, or at least the largest player in the bas
