Recently, in the international financial market, the RMB exchange rate has suddenly seemed to have taken stimulants.

It soared by more than 600 points in one day, making many investors exclaim, "This is too exciting."

At the same time, the US dollar is like a frost-bitten eggplant, wilting, and not only depreciating against the RMB.

Even the exchange rate against the Japanese yen fell to the awkward level of around 150 due to this series of violent financial shocks.

One can't help but wonder: What on earth has blown these currencies into this state?

To understand this financial crisis, we must first talk about the U.S. dollar’s ​​“secret weapon” – the petrodollar.

Information source: Financial Times published on July 26, 2024 - "The RMB exchange rate soared 600 points in one day! Global capital is chasing Chinese assets"

Information source: Daily Economic News released on July 25, 2024 - "The US dollar continued to fall against the Japanese yen, falling below 152, with a daily decline of 1.23%"

In fact, the reason why the U.S. dollar can run rampant around the world is largely thanks to the oil in the Middle East.

Think about it, all oil transactions around the world are settled in US dollars. Isn’t this equivalent to labeling the dollar as a “hard currency”?

No wonder the United States has been particularly concerned about the affairs of the Middle East for so many years, and would like to treat the Middle East as its own backyard.

However, the situation in the Middle East has undergone earth-shaking changes recently. First, Saudi Arabia and Iran, the two long-time "enemies", shook hands and made peace, making people exclaim, "The world is so wonderful."

Then, the dozen or so factions within Palestine that had been fighting for decades suddenly sat together and signed a reconciliation agreement as if they had drunk a harmony potion. That was not all, even the Houthi armed forces and government forces in Yemen began to talk about peace.

This series of reconciliations is like dominoes, falling one after another, making it hard to keep up.

Behind these reconciliations, there is an invisible hand silently pushing them forward - that is our great Eastern power. Through superb diplomatic skills, the great Eastern power has made a beautiful move in the complex chess game of the Middle East without spending a single soldier.

This diplomatic strategy of "peace is the most precious thing" not only stabilized the situation in the Middle East, but also indirectly dealt a heavy blow to the US dollar.

You may ask, how can the dollar be in trouble when peace is achieved in the Middle East? There is a lot of truth in this.

Source: Beijing News published on July 23, 2024 - "Promoting reconciliation among Palestinian factions: Why in Beijing? Why in China?"

Source: Global Times published on April 1, 2024 - "Hong Kong media: China-mediated Iran-Saudi Arabia reconciliation brings precious exhibits to the Palace Museum"

Source: Reference Information published on July 25, 2024 - "Yemeni government and Houthis reach an agreement, Saudi Arabia welcomes it"

First of all, with the stability in the Middle East, the United States will have fewer excuses to stir up trouble there, and Israel, the United States' right-hand man in the Middle East, will also begin to feel a little isolated and helpless.

Secondly, if the Middle Eastern countries were not at war every day, why would they buy American weapons? This is a huge business.

Furthermore, if the Middle Eastern countries have time to develop their economies, they will definitely find ways to get rid of their dependence on the US dollar and seek more diversified trading methods.

Talking about getting rid of dependence on the US dollar, this has been a hot topic around the world in recent years. Many countries are figuring out how not to be led by the US dollar. Even Japan, a staunch ally of the United States, has begun quietly selling its US Treasury bonds.

Russia was even more straightforward. After the United States imposed sanctions on it, it almost converted all foreign exchange transactions into RMB, which suddenly increased the share of RMB in the Russian foreign exchange market to 99.6%. This figure shocked the Americans, who thought that this was the rhythm of a change.

Source: China Economic Net, published on July 11, 2024 - "Foreign Media: RMB accounts for nearly 100% of Russia's foreign exchange market share"

Faced with this situation, U.S. Treasury Secretary Yellen could no longer sit still. The United States is very worried about the trend of de-dollarization. The United States uses the dollar to sanction other countries, which has instead accelerated the process of other countries looking for alternatives.

This is true, but it may be a little late to say it now. It's like a naughty child who bullies others all the time. Now that others don't want to play with him, he feels regretful. Unfortunately, no one buys it anymore.

In this global trend of de-dollarization, our RMB has found many opportunities. More and more countries have begun to use RMB for international trade settlement. This has not only raised the international status of RMB, but also injected new impetus into China's economic development.

Of course, the RMB still has a long way to go before it can completely replace the US dollar. After all, as the world's main reserve currency, the US dollar still has its unique advantages in credit and liquidity.

However, as China's economy continues to grow, the RMB is gradually gaining recognition in the international market. As the world's second largest economy, its currency has naturally become the new favorite of many countries. Especially with the support of China's strong industrial strength, the RMB's attractiveness is increasing day by day.

Stability in the Middle East means more than just reducing wars; it also means more opportunities for development. If the Middle Eastern countries can truly unite and concentrate on economic development, it will be a scene that will make the United States uneasy.

Think about it, if the Middle East no longer needs the United States' "protection", the US troops stationed there will really be left with nothing.

Of course, this change will not happen overnight, and the reconstruction of the global economic order is a long and complex process.

We may see the emergence of more regional currency settlement systems, and the world economic landscape may also develop in a multi-polar direction. In this process, every country needs to seriously consider how to find its own place in the new international economic order.

For China, this is undoubtedly a rare opportunity. With the acceleration of the internationalization of the RMB, China's role on the global economic stage will become increasingly important. However, opportunities always coexist with challenges. How to promote currency internationalization while maintaining economic stability and how to safeguard its own interests in international competition are all issues that require careful consideration.

Finally, let us return to the question at the beginning of the article: Why did the RMB appreciate and the US dollar plummet as soon as the Palestinian reconciliation took place? The answer should be clear now.

This is not just a simple exchange rate fluctuation, but a microcosm of the profound changes in the global economic landscape.

The peace process in the Middle East, the global trend towards de-dollarization, and the rise of emerging economies are intertwined and are reshaping the international economic order as we know it.

In this major change in the global economy, every country and every region is looking for its own position. For ordinary people, this may seem distant and complicated, but in fact, these changes are quietly affecting our daily lives.

From our investment choices, to the currency we exchange when traveling abroad, to the prices of imported goods we buy, all are closely related to this transformation of the global economic landscape.

So, next time you see news about exchange rate fluctuations, don’t rush to complain or cheer, think about the bigger picture behind it, and you will find that the world is much more interesting than we thought.

And we are living in an era full of opportunities and challenges, witnessing the writing of history.

Let us stay curious, keep learning, and find our own opportunities in this ever-changing world.

After all, only by understanding the world can we better grasp our own future.