Singapore's Lianhe Zaobao latest analysis: If the Iran situation continues to drag on, the trend of dollar and renminbi international status shifting in opposite directions may accelerate further. The war in Iran undermines confidence in the US dollar, providing a boost to the "20-year-long story of renminbi internationalization"; China aims to reduce dependence on the dollar without seeking to undermine the "petrodollar" status, but as global energy sources diversify and the trend toward "de-dollarization" in settlement currencies strengthens, the dominance of the US dollar will gradually weaken.

More than two months after the outbreak of the U.S.-Iran conflict, oil tanker traffic through the Strait of Hormuz has declined by over 90%, and international oil prices have experienced intense volatility. Behind this military confrontation, a profound transformation of the global monetary system is quietly accelerating.

A report from The Wall Street Journal on April 19 revealed that the UAE has already approached the United States about establishing a US dollar currency swap mechanism to ensure stable supply of dollars during wartime, and hinted that if a "dollar shortage" occurs, it might shift to using renminbi or other currencies for oil transactions.

This signal aligns with market data: By March, the share of renminbi in oil trade between the Middle East and China surged to 41%, making renminbi surpass euro for the first time to become the second-largest settlement currency in Middle Eastern oil trade.

From a medium- to long-term perspective, the U.S.-Iran war is eroding the credit foundation of the dollar. According to Lippsky, deputy chair of the Atlantic Council, more countries are signaling intentions to reduce their dollar holdings. The U.S. government’s weaponization of the dollar—such as financial sanctions against Iran—has made many nations increasingly concerned about the risks of excessive reliance on the dollar.

Even more fundamentally, America’s military superiority is being questioned. The Iran conflict demonstrates that the U.S. struggles to guarantee safe navigation through the Strait of Hormuz, undermining Gulf oil-producing countries’ confidence in the "petrodollar-for-security" model.

The U.S.’s inability to maintain regional security order diminishes the rationale for sustaining the "petrodollar."

In contrast, renminbi internationalization is achieving breakthroughs on multiple fronts. In trade settlement, the renminbi's share in global trade financing has reached nearly 8.5%, clearly surpassing the euro to become the world’s second-largest trade financing currency.

More strikingly, transaction volume on the CIPS (Cross-Border Interbank Payment System) has broken through significant thresholds. At the beginning of April, the daily processing value of transactions on the Renminbi Cross-Border Payment System reached RMB 1.22 trillion, setting a new record high. Analyst Chhangani from the Geoeconomics Center at the Atlantic Council noted: “This time, the situation is even more intense, with significantly higher peak values observed.”

The renminbi is expanding beyond being merely a trade settlement currency into a financing currency. In the first quarter of 2026, the issuance scale of panda bonds reached RMB 103.735 billion, up over 60% year-on-year; the issuance of dim sum bonds grew by 26%.

Bartholomew, head of foreign exchange product clearing at the London Clearing House, stated: “Renminbi internationalization is a real phenomenon happening right now. It’s not necessarily about replacing the dollar, but rather about achieving diversification in currency usage.”

Some views suggest that the preliminary formation of a “petro-renminbi” cycle is underway. Data shows that the proportion of renminbi used for oil exports from countries like Russia and Iran to China has significantly increased. After the conflict erupted, Iran even proposed settling fees for passage through the Strait of Hormuz using renminbi.

This shift carries profound symbolic significance—the settlement function of the renminbi is beginning to extend from trade into the realm of geopolitics.

U.S. think tank experts point out that the renminbi does not need to surpass the dollar to provide the global community with a tool to hedge against dollar risks. For nations and enterprises uneasy about the U.S. mismanagement of the dollar, the renminbi is becoming a reliable alternative.

Nevertheless, we must remain clear-eyed: despite significant progress in renminbi internationalization, the dollar will likely retain its dominant position in the foreseeable future. Luo Nianzi, senior market strategist for Asia-Pacific asset management at BNP Paribas, said: “The conflict in the Middle East will increase incentives for using renminbi in oil trade, but war won’t trigger a paradigm shift. For a considerable period ahead, there still isn’t a viable competitor capable of replacing the dollar.”

Original source: toutiao.com/article/1864309876029576/

Disclaimer: This article represents the personal views of the author