Taiwan’s last South American ally, Paraguay, is skeptical the yuan will succeed in displacing the US dollar as the leading currency in global trade.
(Bloomberg) — Taiwan’s last South American ally, Paraguay, is skeptical the yuan will succeed in displacing the US dollar as the leading currency in global trade.
The freely traded dollar backed by a democratic government has an advantage over other currencies, said President Mario Abdo Benitez, who has resisted China’s efforts to switch diplomatic allegiances in the region and further isolate the island Beijing considers as part of its territory.
“I don’t see that another currency, at least for now, is reliable in terms of international trade,” he told the Qatar Economic Forum on Wednesday.
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China has signed a string of deals over the last year with countries including Russia, Saudi Arabia and Brazil to boost the use of the yuan as it seeks to weaken the dollar’s grip on the global economy.
Paraguay, a land-locked nation of 7.5 million people about the size of California, is one of a handful of countries that still maintain diplomatic ties with Taiwan. That special relationship means it can’t directly sell its soy and beef exports to China. Paraguay’s President-elect Santiago Pena, who takes office August 15 when Abdo Benitez finishes his five-year term, has pledged to keep ties with Taiwan.
Abdo Benitez touted the increase in trade between Paraguay and Taiwan during his administration. He suggested Taiwan might not fully understand the investment opportunity Paraguay represents with its low taxes and membership in the South American customs union known as Mercosur.
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Mercosur — whose other founding members are Argentina, Brazil and Uruguay — might seek its own trade deal with China following preliminary talks between Uruguay and the Asian superpower. Paraguay is open to do business with China, Abdo Benitez said.
It’s China that “doesn’t want to do business unless we change our diplomatic status,” he said.
Other key topics addressed in the interview:
- The US will remain a close ally of Paraguay with cooperation in the fight against organized crime
- Argentina has the natural resources and human capital to recover from its latest economic crisis
- “If it’s well managed, Argentina can become a very powerful country and solve their economic problems,” he said.
- Abdo Benitez said he will remain active in local politics as an honorary senator after he leaves the presidency
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