The emergence of China’s petro-yuan

October 26, 2017

Business, Did you know?, International

The emergence of China’s petro-yuan

RT

One of the world’s top energy importers, China, is set to roll out a yuan-denominated oil contract as early as this year. Analysts call the plan, announced by Beijing in September, a huge move against the dollar’s global dominance.

The so-called petro-yuan is a “wake up call” for investors who haven’t paid attention to the Chinese plans, according to the head of Graticule Asset Management Asia Adam Levinson, as quoted by Bloomberg.

Earlier this year, the Chinese government announced plans to start a crude oil futures contract priced in yuan and convertible into gold. The contract will enable the country’s trading partners to pay with gold or to convert yuan into gold without the necessity to keep money in Chinese assets or turn it into US dollars.

The new benchmark will reportedly allow exporters, such as Russia, Iran or Venezuela to avoid US sanctions by trading oil in yuan.
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Video: China launching ‘petro-yuan’

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Venezuela publishes oil prices in Chinese currency to shun U.S. dollar

Reuters

CARACAS- Venezuela published the price of its oil and fuel in Chinese currency on Friday, 13 September 2017 in what it called an effort to free the socialist-run country from the “tyranny of the dollar,” echoing a plan recently announced by President Nicolas Maduro.

Maduro last week said his government would shun the dollar after the United States announced sanctions that blocked certain financial dealings with Venezuela on accusations that the ruling Socialist Party is undermining democracy.

The global oil industry overwhelmingly uses the dollar for pricing of products.

A weekly Oil Ministry bulletin published on Friday listed September prices in yuan, while including prices from previous weeks and months in dollars.

Venezuela’s yuan-based prices appear to be the result of multiplying dollar prices by the dollar/yuan exchange rate.

The price per barrel for the week ending 13 September 2017 was 306.26 yuan, equivalent to $46.76 based on the exchange rate listed in a footnote. That is up from the previous week’s price of 300.91 yuan, or $46.15 based on the corresponding exchange rate.

Sanctions by the administration of President Donald Trump blocked U.S. citizens from buying new debt from Venezuela or its state oil company, but did not directly interrupt import and export operations.

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