The trading for this week has just begun, and the Chinese yuan has experienced a decline against the US dollar in the offshore exchange market, falling below 7.15 at its lowest point.

Compared to last Friday's high, the cumulative decline has reached 480 points.

However, in this round of the yuan's depreciation, we have not observed any signs of capital flight.

On the contrary, due to the increasing global demand for the yuan, a large amount of foreign capital is buying on dips, and yuan-denominated assets are being sought after.

In contrast, US dollar assets, especially US Treasury bonds, are being sold more aggressively as more are issued.

Just last week, Russia confirmed that a batch of oil has been shipped to Pakistan, and unlike in the past, this batch of oil will be settled and paid in yuan by Pakistan.

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This is just another case that illustrates that in energy trade, and even in other international trade, more and more countries are using the yuan.

In the past, yuan trade was mainly conducted in trade with China, but now even in trades where China is not involved, the yuan is also being used extensively.

Taking the ASEAN countries as an example, to avoid the risk of over-reliance on the US dollar, Southeast Asian countries have started to use their own currencies or the yuan in their mutual trade, in addition to trade with China.

Thailand has clearly stated the importance of de-dollarization.

With a significant position in Southeast Asia, Thailand has a population of over seventy million, with a per capita GDP of over seventy billion US dollars.

The trade volume between China and Thailand reached one hundred and thirty-five billion US dollars in 2022.

Don't underestimate the trade volume between China and Russia, which only surpassed one hundred billion US dollars a few years ago.

However, Thailand is not satisfied with this, as China's trade volume with ASEAN has increased by 11.2%, while the trade volume between China and Thailand only increased by 3% in 2022.

From Thailand's perspective, using the yuan can promote trade between China and Thailand.

In 2022, China became Thailand's largest source of foreign investment.

Under such circumstances, Thailand will undoubtedly expand the clearing of yuan without hesitation.

As more and more countries need to use the yuan, this will inevitably support the long-term appreciation of the yuan's exchange rate, so many foreign funds are also taking advantage of the current low yuan exchange rate to buy yuan assets aggressively.

Since June, although there have been occasional net sales of northbound capital, on balance, the amount of net sales is far less than the amount of net purchases.

Last Thursday and Friday, the net purchase amount of northbound capital reached 9.2 billion and 10.5 billion respectively.

Although the previous three days were net sales, the cumulative amount was only 5.3 billion.

On the other hand, in addition to the stock market, the presence of foreign capital buying bonds has also been observed.

In contrast, we can see that in the latest monthly data, the UK government sold US Treasury bonds worth up to 30 billion US dollars.

One side is being aggressively purchased, and the other is being heavily sold, making the contrast even more apparent.

Why are more and more countries choosing to pay in yuan instead of US dollars?

To avoid exchange rate risks caused by the constant fluctuations of the US dollar is a very important reason.

Due to the Federal Reserve's adjustment of monetary policy, the US dollar's exchange rate has shown significant volatility, and overall, the trend indicates that the US dollar will continue to decline in the coming period.

If too many US dollars are held now, it means facing significant losses.

It can be predicted that in the future, countries around the world will vigorously develop currency transactions with China in their respective currency markets.

It can be imagined that in the future, the yuan will be in great demand!