More Dedollarization: Indian Refiners’ Payments to Russia, Argentina Payment to IMF Both in Yuan

July 04, 2023

The world continues to chisel away at the dollar’s reserve status.

In the first of the two most recent examples of how non-western nations plan to avoid the weaponized dollar, late last week Argentina made a loan repayment to the International Monetary Fund worth the equivalent of $2.7 billion “without using dollars” on Friday, using Chinese yuan and special-drawing rights notes instead, Reuters reported.

The operation is expected to deplete Argentina’s $1.65 billion in SDRs, according to a central bank source, “with yuan making up the difference.” While Reuters’ take home message here is that the “use of yuan underscores how desperate the country’s dollar position has become”, an alternative conclusion is that when it comes to international obligations – at least as far as the IMF is concerned – the yuan is as good as the greenback, an observation that will make China quite happy.