According to the Wall Street Journal on 3/15/22, Saudi and Chinese officials are in talks to price some of the nation's oil sales in yuan rather than dollars or euros.
The Saudis have traded oil exclusively in dollars since 1974, following a deal with the Nixon administration that included security guarantees for the kingdom. At first glance, the idea of Saudi Arabia accepting Yuan for oil sounds like a huge blow to dollar hegemony. This really depends on if Saudi Arabia does not convert this Yuan back into dollars. Saudi Arabia currently has their currency, the riyal, pegged to dollars. This would have massive affects on their economy as well. However, the mere existence of these talks are potentially paradigm shifting; accelerating de-dollarization.
This headline and takes may be overblown today, but what does such a maneuver look like a decade from now? You may see Saudi Arabia, who once only accepted dollars, accepting a basket of currencies (where the Yuan makes up a component) for oil. In this light, it does appear to be a significant step away from the dollar.
This trend of nations attempting to move away from the dollar only seems to be picking up, but does replacing the dollar for yuan or other centrally controlled currencies actually fix anything for these countries?
Do these nations end up in the same scenario by letting a new hegemonic global reserve currency emerge? Is it possible we see massive global coordination in the form of a bancor?
Or is it possible we see this trend of pricing oil in alternative currencies eventually extend to decentralized digital currencies such as Bitcoin.
While there are a lot of questions from such a headline, if these talks are acted on, we may see big changes coming.
FOMC Expected to Hike Rates Tomorrow 3/16/22
Tomorrow's FOMC interest rate decision could be the first increase since December 2018. Expectations from traders are a 25 basis-point or 50 basis-point hike.
With this hike coming, volatility and uncertainty is high in the Bitcoin market.