Petrotahlil - There is a news doing the rounds stating that China has decided to cancel the dollar peg in the stock exchange transactions and decided to deal officially with the Chinese Yuan instead of the dollar.
The news also says that this would mean that the dollar has become non-existent in Chinese trading and the US dollar will fall strongly against the Chinese yuan and may affect global markets.
The news was discussed today on the BBC World English afternoon program. It is an economic war that could lead the world to a devastating war that cannot be neglected if America acts foolishly in the face of this decision !! China 2021 will lead the world. This is China's old dream and what it planned to achieve for decades or more, the report also said.
However, we found that there has been no such decision that has been taken by China. China's central bank may be re-pegging the yuan's exchange rate against the US dollar to avert the threat of a financial crisis and create a sense of stability amid the huge economic and financial uncertainness resulting from the coronavirus, scmp.com said citing analysts.
While the central bank never publicly admitted that it would peg the yuan to the US dollar, in the current environment, Chen Yulu, a deputy governor at the PBOC said last month that the yuan would fluctuate around the level of 7 yuan in the future, the report said. The analysts cited in the report said that Chen's comments signalled Beijing's reluctance to weaken the yuan substantially despite economic challenges and pointed to the central bank considering the adoption of a de-facto peg in the yuan exchange rate.
Fake News Buster
A report that appeared in the Forbes.com said that China was nowhere close to replacing the dollar. The dollar is gold standard and if the euro could not overtake it, the Chinese renminbi (RMB) sure will not. The report also said that China's currency accounted for 1.85 per cent of the global transactions. China's currency has barely moved up the charts in terms of demand for cross border transactions and in March 2018 it accounted for 1.6 per cent of all transactions. By comparison, the US dollar went from 39.4 per cent of all transactions in march 2018 to 44 per cent in March 2020, the Forbes report also said.