Bolivia foreign trade: Bolivia Bolivia has made foreign finance better by using the yuan for both imports and exports. Bolivia is the latest South American country to question the power of the dollar.
From May to July, Bolivia’s financial transactions totaled 278 million Chinese yuan, which is about $38.7 million. According to Economy Minister Marcelo Montenegro, this is 10% of Bolivia’s foreign
trade. “We’re already using the yuan,” Montenegro said. It’s true and looks good.” He also said that Banco Unión, which is owned by the government, helps producers of bananas, zinc, and wood buy and sell yuan and importers of cars and capital goods do the same.
Even though the number of yuan transactions is low right now, Montenegro said it was confident that it would grow.
The yuan is used by Bolivia, Brazil, and Argentina for international business. This is particularly true for countries seeking stronger ties with China and reduced reliance on the U.S. dollar and its power.
Margaret Myers, from the Inter-American Dialogue in Washington, said the yuan’s popularity in Latin America is linked to political ties with China.
As China’s power grows, attention to its trade and investment operations increases. Washington is worried that this will hurt the special place of the dollar in Latin America.
Despite economic worries, Argentina recently started using the yuan for Chinese imports. This was done to keep its foreign exchange savings safe. China could pay its IMF debts with its own currency. The euro is now behind the yuan in terms of Brazil’s foreign savings.
Bolivia switched to the yuan because it has been hard to get dollars since February.
Despite concerns from experts and opposition members, Bolivia’s Chamber of Exporters’ manager viewed the yuan as a potential alternative.
Global macroeconomic forces are a reason to seek alternatives to the U.S. dollar. With rising interest rates, central banks explore alternative currencies.
Bolivia’s president, Luis Arce, seeks alternatives to the dollar due to a “dollar liquidity crisis.”
China aims to diminish the dollar’s global dominance by leveraging the yuan’s ascent.
Analysts say a big shift from the dollar is unlikely, despite the increasing speed of the move toward the yuan. China’s finance sector is hindering its progress.
China’s central bankers have less power than the Federal Reserve.
China’s efforts to promote its currency globally are gaining momentum as more countries recognize the potential unsustainability of the dollar’s current status.
Bolivia’s use of the yuan reduces the dollar’s significance and alters finance in South America.