The Chinese yuan reversed earlier declines and jumped toward its highs of the day following a report by Dow Jones that Saudi Arabia is in active talks with Beijing to price some of its oil sales to China in the currency.
The offshore yuan climbed as much as 0.1 per cent to 6.3867 per dollar, close to the session peak it reached during Asian trading. The currency had weakened as much as 0.3 per cent in U.S. trading before the report on Saudi Arabia.
While the US dollar is the preeminent currency of exchange in global trade and oil markets in particular, other currencies such as the renminbi - as China's currency is also known - have been making headway in cross-border transactions.
The bump for the yuan comes at a time when Chinese assets more broadly have been under some strain. The renminbi has come under tremendous selling pressure over the past couple days amid a rout in the country's stocks. The offshore yuan fell more than 1.1 per cent against the dollar between in the three days through March 14, its worst such drop in a year. The offshore yuan's 200-day moving average at 6.4116 per dollar remains key near-term support for the currency.
There was no indication from the Dow Jones report on the likelihood of Saudi Arabia making such a switch nor how much of its sales might be denominated in yuan if it were to change. It does, however, signal that the conversation around alternatives to the greenback is very much a live debate.