The Ukraine Conflict Could Strengthen the Yuan Against the Dollar – Taiwan

The Ukraine conflict, for which Russia received a sanction and a suspension from the world’s currency system, is being explored by Beijing to boost the yuan’s value against the US dollar, according to Chen Ming-tong of the China Security Bureau.
In an interview, the Taiwanese security director affirms that Beijing always considers ways to reduce its dependency on the dollar. Ukraine conflict is a likely avenue to push up the yuan’s value and usage at the dollar’s expense. And this will also apply to how the yuan is made and how the renminbi trade works.

Taiwan itself, which is claimed by China has heightened its security consciousness since the beginning of the war. They are also learning a thing or two from the Ukraine conflict, which should help their relations with China on that front.

However, General Chen claims that, from another view, the conflict could also strengthen their relations with America should Beijing decide to stay calm and support the US, just like in the battle of September 11, 2001, between the US and Afghanistan.

Beijing Cautiously Maintains Relations With Russia

Moscow plans to use China to keep its economy going in the face of Western sanctions. They plan to use the yuan in their foreign exchange reserves instead of the euro and the dollar after being banned from their euro and dollar reserves. However, the US has since severely warned China about lending assistance.

China, on their part, continuously speaks down on the suspensions against Russia and maintained that they would continue to deal with Russia as they usually do. Also, Beijing has refused to comment on Russia’s decision to wage war on Ukraine.
However, Beijing is taking cautious steps and has barred its companies from freely doing business in Russia, even though they remains a major supplier of oil and gas to China. They are wary not to cross their boundaries and incur sanctions on themselves.

In the immediate term, the yuan is expected to benefit from the ongoing conflict, and appreciate against the dollar.

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