China has signed direct currency agreement with Canada and China thus taking one more step to the global de-dollarization. The People’s Bank of China and Canada’s Prime Minister have announced that Canada will establish North America’s first offshore renminbi hub in Toronto. According to analysts’ estimates, the swap agreement could double or even triple sales revenues between Canada and China impacting the need for the U.S. dollar. Meanwhile, Canadian exporters to China are forced to use the American currency. Thus, they are facing higher currency exchange costs and have to wait longer to close deals. The Canadian government believes that new trading rules will allow more small- and medium-sized companies to expand business in China. However, this is not the worst news for the petrodollar. The swap agreement with Qatar is to deal another blow to the petrodollar system. Importantly, the agreement sets to direct trade with the key OPEC member. Some experts share the view that the agreement seems to “open the door to Petrodollar panic”. The agreement worth 35 billion yuan (about $5.7 billion) signed between China and Qatar will be valid for three years. Qatar is to become the 24th country to open its Forex market to the Chinese currency thus contributing to yuan’s acceptance in the Middle East. Beijing’s aim is to make the renminbi fully convertible in the nearest three years. Indeed, oil producing countries in the Middle East find it more difficult to trust the U.S. dollar. So, other OPEC countries are likely to make currency swap agreements with China as well. At present, China, Russia, and the BRICS countries are finalizing agreements that supersede the old system of the dollar trade. Many countries begin to reject the greenback due to the exported inflation. In this context, the Chinese Yuan will become a more viable option, especially now when the Asian power has taken over the top spot as the world's biggest economy.
