“They can pay in any currency they want to use.” (for their imports)
In theory yes, but in practice, most of their actual contracts require dollars. Just saying.
[In theory yes, but in practice, most of their actual contracts require dollars. Just saying.]
Contracts are written to order. You want to pay in Yuan - there is a contract for that. You want to pay in barley - that can be arranged. Basically, the counterparty has a targeted amount of his currency he wants, and he will charge a premium equal to the cost of the running around he has to do to get whatever that local currency amount is. People transact in dollars because it’s the currency with the highest volume, meaning lowest transaction costs and therefore lowest transaction premiums.