BRICS to Switch US Dollar Loans to Chinese Yuan

According to Eyob Tekalign, Ethiopia’s central bank governor, the discussions involve arrangements for a currency swap. He noted that settling loans in yuan rather than dollars could save Ethiopia millions of dollars in foreign exchange costs, as paying in US dollars remains expensive.

“China is a very important partner for us now, there is growing volume of trade and investment,” said Tekalign. “So it really makes sense to arrange some currency swap, but in terms of converting these things as well. So absolutely, this is something in the making — we’ve requested officially and then working on it.” He added that the country is enthusiastic about the potential savings but is still in early discussion stages.

While China has not yet formally responded, the People’s Bank of China (PBOC) is likely to approve the request. The move fits China’s broader strategy to internationalize the yuan and enhance its use in global settlements. Similar initiatives by other BRICS members, like India, have led to substantial savings in foreign exchange—for example, India reportedly saved nearly $7 billion by purchasing oil in local currencies.

If more BRICS nations follow this trend of converting US dollar loans to yuan payments, it could weaken the US dollar’s dominant role in international finance, leading to a more multipolar currency environment.