The world’s No. 2 and No. 3 economies, China and Japan, began trading directly with their respective currencies. This move has long term implications on the status of the USD as a reserve currency. OANDA prepared a nice infographic visualizing this move, and explanations from Mingze Wu, OANDA’s Market Specialist. Japan and China bypass the dollar – Click to enlarge “Japan’s currency agreement to China means that banks will be able to exchange Yuan directly into Yen and vice versa without the need for USD. From the point of view of end users e.g. commercial companies, this should theoretically translate to lower costs when exchanging between Yuan and Yen. This agreement also came at an apt time, when Japan made record highs in imports and exports to and from China. Imports from China have grown to USD183.4 billion, a 20% increase while exports rose 8% to USD161.5billion. A cost savings of even 1% will equate to more than USD2billion in savings for both Japanese and Chinese companies. It is rare for every agreement to benefit both parties equally, and certainly this is no exception. You would have noticed that imports from China to Japan have increased in greater magnitude as compared to the opposite flow. This does not bode well for Japan, whose local industry is already suffering from declining domestic consumption. Also, looking at recent China trade balance data – exports rose 11.3% YoY vs 10.6% expected; Imports rose 6.3% vs 11.0% expected. A trend began to emerge – China is also aggressively exporting to fuel its economy growth as domestic demands begin to wane. With all things considered, Japan may be encouraging even more imports from China with the agreement while getting less than what they bargained for in terms of exports. Will this break Japan’s economy? Of course not, but it is definitely not helping either.” Further reading: Gold for Oil: India and Iran Ditch Dollar – Report Yohay Elam Yohay Elam Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts. Yohay's Google Profile View All Post By Yohay Elam Opinions share Read Next EUR/USD July 27 Still Enjoying Draghi’s Dramatic Pledge Kenny Fisher 9 years The world's No. 2 and No. 3 economies, China and Japan, began trading directly with their respective currencies. This move has long term implications on the status of the USD as a reserve currency. OANDA prepared a nice infographic visualizing this move, and explanations from Mingze Wu, OANDA's Market Specialist. [caption id="attachment_36947" align="alignnone" width="600"] Japan and China bypass the dollar - Click to enlarge[/caption] "Japan's currency agreement to China means that banks will be able to exchange Yuan directly into Yen and vice versa without the need for USD. From the point of view of end users e.g. commercial… Top Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk.4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk.5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.