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How the Petro-Yuan Will Impact The U.S. Dollar

This past March, China launched trading of the yuan-denominated crude oil futures contracts. These are the first futures that have been listed on China’s mainland to overseas investors.

Given that China is the largest importer of crude on the planet, Asia Times called the launch of the petro-yuan a ?geoeconomic game-changer.?

But what does this mean for U.S. investors?

For the first time, overseas investors will be able to access a Chinese commodity market. And to start, the U.S. dollar will be accepted for deposit and settlement, while several other currencies will be accepted for deposit only, according to the Times.

Will the Petro-Yuan Kill The Petro-Dollar?

Experts say there?s no reason to think the launch of the petro-yuan will immediately end the dominance of the petro-dollar, according to Pepe Escobar of the Asia Times. He writes that the end of the petro-dollar depends on many variables, with the most important being how China controls the global oil market.

Escobar also explains that one benefit of the petro-yuan for China will be that it will bolster the country?s efforts to invest in Asian and Middle Eastern infrastructure, particularly in Saudi Arabia.