BRICS: JP Morgan sees the Chinese yuan dethroning the dollar soon!

The American bank JP Morgan believes that the Chinese yuan could usurp the crown of financial market hegemony from the dollar. In 2023, the currency of the Middle Kingdom has continued to gain importance. A situation that has been beneficial for the BRICS, of which China is one of the most influential members.

JP Morgan supports the BRICS’ ambitions for dedollarization

As Iran pushes the BRICS towards monetary revolution, the American bank JP Morgan adds a bit of weight to the organization’s mill. According to its findings, the Chinese yuan has the potential to dethrone the American dollar.

The argument of the financial behemoth is based on the recent dynamics of the Chinese currency. According to JP Morgan, the yuan is emerging as a credible financial alternative to the currently dominant greenback, despite the United States being riddled with debt.

For the banking group, the yuan could replace the American dollar. This is particularly the case if the greenback continues its descending trajectory in the international monetary system. That is indeed the trend that has been observed for several months.

Paradoxically, this decline of the American currency is not primarily linked to the economic troubles of Uncle Sam’s country. Analyses show that it is the yuan which, through its dynamism, is pushing the American currency towards the depths.

BRICS : JP Morgan affirme que le yuan chinois pourrait mettre fin au dollar américain https://t.co/f7kGYYnOhE

— Rikard René 🇫🇷🇨🇦 (@RikardRene) January 8, 2024

The American dollar affected by the BRICS ?

For Alexander Wise, strategy researcher at JP Morgan, the only real competitor to the American dollar currently is the yuan. The expert highlighted the role of the Chinese currency in the potential decline of the dollar.

According to his explanation, this is a consequence of China’s central position in global trade. This serves as a natural driver for the growing importance of the renminbi (yuan) in the global economy over time.

Alexander Wise believes that certain key factors could support the rise of the yuan. He cites, among others, the easing of capital controls, market liberalization, and measures aimed at improving market liquidity.

This, not to forget the promotion of Chinese government bonds as safe alternative assets. All of this will obviously strengthen China’s financial power, but also benefit the BRICS, of which the country is a member. Recall that throughout 2023, the alliance has strategically pursued its plan to move away from the dollar. A project that should see further developments throughout this new year.