China’s Plan for the Yuan Could Backfire in Any Crisis, Strategist Says
- Counterparties could dump yuan for dollars, adding to pressure
- Argentina swapped pesos for yuan, then bought dollars in 2015
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China’s currency-swap lines with nations spanning the globe, designed to bolster the international role of the yuan, could backfire badly in a world crisis.
So argues Mansoor Mohi-uddin, a senior macro strategist at NatWest Markets in Singapore. The danger is that foreign central banks would exchange their currencies for yuan with the People’s Bank of China, then dump those holdings for dollars if a crisis hits, he wrote in a research note Friday.