With the extension of operation twist and and the inevitable QE3, continued volatility and devaluation of the USD is the in the near future. This uncertainty has caused other countries to seek other options for international trade than the reserve currency. Hong Kong recently announced the possibilities of de-pegging from the USD and now China is making deals to turn the Yuan into an internationally used currency. BBC reports:
China and Brazil have agreed a currency swap deal in a bid to safeguard against any global financial crisis and strengthen their trade ties.
It will allow their respective central banks to exchange local currencies worth up to 60bn reais or 190bn yuan ($30bn; £19bn).
The agreement is the latest in a series of similar deals signed by China with its trading partners.
In March this year, it signed a swap deal with Australia worth up to A$30bn ($31bn; £20bn) to promote bi-lateral trade and investment.
It has also inked currency pacts with Hong Kong and Japan.
Analysts said that Beijing has been trying to push for trade to be settled in yuan, rather than in US dollars, as part of its plans to seek a more global role for its currency.
“The motivation is to be less reliant on the US dollar,” Sean Callow, chief currency strategist at Westpac, told the BBC.