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A long way ahead for the Yuan to match the US dollar

Comments on Deepanshu Mohan "Is it the end of the dominant dollar?" 10/12/2015

While the Yuan will have an increasing role in international exchanges and as a reserve currency when its inclusion in the SDR takes effects, the initial effects may be relatively small and it will take at least a decade and possibly two before the Yuan to have the possibility to have an equal role as the US dollar.

Likewise, the weight of Yuan in the SDR will take the same length for it to have the prospect of an equal weight as the US dollar.

Of course, it will obviously depend on how China will handle its currency. Will China allow its Yuan as free as the US dollar? The freer a currency, the more likely people want to hold it, all other things equal.

Having said that, the combination of a SDR currency and China's status of a large trading partner for many countries may work in favour of increasing the role of Yuan to be used by many countries to minimise the costs of trade.

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