Yuan on the Rise: Can China's Currency Challenge the Dominance of the US Dollar?

Chinese President Xi Jinping's visit to the US and meeting with President Donald Trump has raised questions about the future of global currencies. The uncertainty comes at a time when global trade is being disrupted by tensions between the world's two biggest economies.

The US dollar, which has been the trusted medium of exchange globally for decades, has given the US economy great power. It allows the country to live beyond its means and print more dollars to pay for goods from other countries.

However, China's growing economic might has led some to wonder if the Chinese yuan can rival or even surpass the US dollar as the global currency of choice.

A recent research paper by the Peterson Institute for International Economics found that the yuan's share in the SWIFT network spiked after sanctions were imposed on Russia and other countries, making them more willing to use the yuan. By July 2024, the yuan's share of global payments was at 4.7%, overtaking the Japanese yen and Canadian dollar to become the fourth most used currency.

However, its share has since fallen back to 2.75%, leaving it as the sixth most used currency. The dollar's share is still around 50% in SWIFT.