Market Bets on Yuan as De-Dollarization Picks Up Pace

De-dollarization waves have now started to crash hard on the shores of the United States’ economic demographics. The US dollar has documented its worst plunge in 40 years, with the DXY index sitting at an all-time low of 96.70. A recent report by the Financial Times dubbed the current US dollar fall as its worst in decades, particularly since the end of the gold-backed Bretton Woods system. In the meantime, the competitors of the American currency have started to gain leverage across the market, with the Chinese Yuan emerging as the top contender out of the lot.

Also Read: Global Money Flees the US As De-Dollarization Explodes

Also Read: Global Money Flees the US As De-Dollarization Explodes## Chinese Yuan: The New Currency King?

Source: BloombergSource: BloombergAs the US dollar falls into a complex spiral of price declines, battered heavily by Trump’s tariff hikes, the Chinese Yuan has been busy making its latest moves.

Analysts have commented on an imminent Chinese yuan hike, as US debt fears continue to batter the US dollar.

“Compared to late April, onshore clients have turned less bearish on China’s near-term growth outlook, as macro data has been more resilient than previously feared so far this year, despite notable divergence between exports and domestic demand,” Goldman Sachs analyst Lisheng Wang wrote in a note on Sunday.

“Compared to late April, onshore clients have turned less bearish on China’s near-term growth outlook, as macro data has been more resilient than previously feared so far this year, despite notable divergence between exports and domestic demand,” The investors have now grown wary of the dollar, claiming that rising US debt fears are adding more pressure on the US dollar. This development has compelled them to consider alternatives, preferably exploring the yuan as an adaptive substitute in the process.

The Wall Street analysts have predicted a bullish forecast for the yuan, adding how it may continue to solidify its presence by “breaking the 7 per dollar level in six months and 6.9 in 12 months.”

China Dumps US Dollar, Taps Gold In The Process

China is also actively involved in methods exploring diversification away from the US dollar. This is also indicative of rising de-dollarization trends catching pace in China.

“The share of US Treasury holdings in total Chinese FX reserves has declined by ~15 percentage points since 2016, to ~22%, near the lowest in at least 15 years. Over the same period, gold’s share has risen ~5 percentage points, to a record 6.8%.

**“The share of US Treasury holdings in total Chinese FX reserves has declined by ~15 percentage points since 2016, to ~22%, near the lowest in at least 15 years. Over the same period, gold’s share has risen ~5 percentage points, to a record 6.8%.**This trend accelerated in 2022, and since then, gold’s share of Chinese reserves has doubled. Over this time, China has acquired ~200 tons of gold. Gold is more desired than ever.”

China is diversifying its currency reserves out of the US Dollar:

The share of US Treasury Holdings in total Chinese FX reserves has declined by ~15 percentage points since 2016, to ~22%, near the lowest in at least 15 years.

Over the same period, gold's share has risen ~5… pic.twitter.com/uFa5bQTucg

— The Kobeissi Letter (@KobeissiLetter) June 26, 2025

China is diversifying its currency reserves out of the US Dollar:

The share of US Treasury Holdings in total Chinese FX reserves has declined by ~15 percentage points since 2016, to ~22%, near the lowest in at least 15 years.

Over the same period, gold's share has risen ~5… pic.twitter.com/uFa5bQTucg

Also Read: De-Dollarization? Not So Fast: Why US Dollar Demand Is Surging in 2025

Also Read: De-Dollarization? Not So Fast: Why US Dollar Demand Is Surging in 2025