The Chinese yuan has been looking to overtake the US dollar as the world’s reserve currency for over a decade. Despite multiple attempts, the Chinese yuan has failed to outperform the US dollar and uproot it as the global currency. However, that does not mean the yuan will never be able to beat the USD in the future.
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The Xi Jinping administration is looking at various ways to bring down the US dollar and keep the Chinese yuan ahead for all transactions. The Communist nations are convincing other developing countries to ditch the US dollar and pay local currencies for trade. In this article, we will highlight which currency is realistically stronger: The US dollar or the Chinese yuan.
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Which is the Stronger Currency? US Dollar or Chinese Yuan
Several key factors make the US dollar realistically stronger than the leading local Asian currency, the Chinese yuan. The USD provides the highest yield in Treasury notes and generates a minimum of 4.5% returns throughout. On the other hand, the yuan delivers a minimum of 2.3% bond yield which is around 40% less than the USD.
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Therefore, investing in the USD provides better returns than the Chinese yuan at any given point in time. This gives the USD an added advantage as it’s the top-performing currency in the forex markets. Local currencies have delivered profits but have failed to generate positive yields consistently.
Also, the USD is a currency that is used by the majority of countries to settle cross-border transactions. The yuan is used only among the counterparts of China. The US dollar is a liberal currency while China is yet to liberalize its economy for other currencies to thrive in their markets.
In conclusion, the US dollar is realistically a stronger currency in the world than the Chinese yuan. The local currency stands no chance of beating the USD at least this year in 2024.
