Yuan Might Be What You Don’t Expect - Umur Sarp Ünsal

Would you like to give your Turkish Lira, Euro or Dollar to me, so that I give you the Chinese currency, Yuan? Why not?

Another question, would you like to get paid in Yuan (Chinese currency again), for your hard work at your job, internship (if you are even getting paid) or any business you are currently doing? Again, why not?

The Chinese government thinks it could be a good idea to pay for your oil, in its currency, Yuan… Why would somebody say yes to this, and refuse the payment in Dollar, where Dollar is globally accepted as the payment for black gold (oil or petroleum)? China even made a market for you to quickly give your precious oil, in exchange for barely international Yuan. This market is called Shanghai International Energy Exchange (INE).

Whether you know what is going on with all of these, or you have no idea about what even Yuan is, know that there is no proper consensus on what to do with this Yuan based oil market.

We could summarize the possible positive sides of receiving Yuan as your payment as:

- Do you trust USA and Western powers overall? Maybe not for every one of us, but it is in a good location if you live near Shanghai and want to sell your oil (physically) to authorities in Shanghai. Because it is even annoying to think about the troubles you are going to face when you literally carry your barrels of oil from, say, Japan, to all the way to, say, England (another market for crude).

- Shanghai International Energy Exchange is a very rapidly growing market.

- China wants to have a bigger and louder say in World economy by putting its own money on the showcase. So, it will do anything to have a good impression and a fully working market.

If you want to have better relations with China, this big country of East will maybe like your gesture of accepting its currency over Dollars.

Side effects?

- The Chinese government likes controlling Yuan very much. So, if you get 10 Dollars’ worth Yuan for your goods, you might not have the same 10 Dollars’ worth of Yuan after a while.

- This is a pretty new market. Not everyone knows it, yet…

- Though it is growing fast, it is not as popular as WTI or Brent, however…

- Trading hours are a little different than trading hours of WTI or Brent

- Do you trust China overall?

- Are these reasons good enough to keep Dollar and shoo away Yuan?

Are you convinced that you should use Yuan for your transactions, investments, or for the looks of it?

Whatever your answer is, a yes, a no, or an I don’t know, just know that people, still, struggle to find a good yes or no excuse…

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