The internationalization of the yuan is slow but inexorable. The last link in the chain is the agreement between China and South Korea to use their own currencies to regulate trade between the two countries: China will accept won and Korea will accept the yuan-renmimbi. Until now these 'acceptances' depended on the will of the counterparties and on the currency directives in the two countries. From today, however, there will be no limits to these regulations, there will be no need to resort to a third currency (usually the dollar) to 'triangulate' payments. The yuan will then be able to be held by South Korean exporters and those funds will add to other 'xeno-yuan' across the border.
The agreement was announced during Chinese President Xi Jinping's visit to Seoul yesterday, but the start date has not yet been decided. These direct currency settlements come in addition to similar agreements China has made with Britain, Japan, Russia and New Zealand.
