The yuan is making significant inroads in South America as another country, Bolivia, reduces its dependency on the US dollar.
Between May and July, Bolivia’s operations in yuan accounted for approximately 10% of its total foreign trade volume during this period. This increase in yuan usage came as Bolivia faced a shortage of dollars due to a decline in natural gas production.
During the months of May to July, Bolivia conducted financial transactions totaling 278 million Chinese yuan ($39 million).
Exporters of bananas, zinc, and timber are also switching to yuan, as well as importers of transportation vehicles and production materials. While the current amount being used in yuan is relatively small, officials of the country have expressed confidence that it will increase over time.
Bolivia’s national currency, the boliviano, has been tied to the dollar. However, due to a decrease in foreign reserves and the government’s ability to maintain this peg to the dollar being threatened, Bolivia, following the lead of Argentina and Brazil, is leaning towards using yuan and moving away from the dollar.