ethiopia Seeks Yuan-based Transactions to Ease Dollar Dependence, Deepen China Partnership
ADDIS ABABA – Ethiopia is actively pursuing mechanisms to convert trade settlements into Chinese yuan as it seeks to reduce reliance on the U.S. dollar and bolster economic ties with Beijing, a move gaining momentum amid ongoing debt restructuring challenges. The initiative,revealed as negotiations with Eurobond holders remain stalled,signals a strategic shift toward option currencies to navigate persistent foreign exchange pressures.
Ethiopia reached a restructuring agreement with its official creditor committee – co-chaired by China and france – in July. However, securing a deal with investors holding a $1 billion Eurobond has proven difficult. This impasse, coupled with limited dollar reserves, is driving Addis ababa to explore increased use of the yuan for international trade, particularly with China, its largest trading partner and key lender. The move aims to mitigate the impact of dollar fluctuations and streamline transactions, potentially unlocking new avenues for economic cooperation.
The country’s pursuit of yuan-denominated trade reflects a broader trend among nations seeking to diversify away from the dollar’s dominance, particularly those with strong economic relationships with China.While the full extent of the conversion plan remains under progress, officials indicate it will initially focus on facilitating trade with Chinese companies and could expand to include other partners in the future.
