Illustration of the Chinese yuan sitting over the US Dollar taken June 14, 2022 (Reuters)

The yuan overtook the US dollar in China's cross-border trade transactions in March for the first time, dealing a new major blow to the green note that is witnessing a global decline in its position as the top reserve currency, Reuters reported on Wednesday.

Rising from $434.5 billion in February to $549.9 billion in March, the Chinese currency marked a record milestone.

In Cross-border trade settlements, the yuan accounted for 48.4% of the used notes, said the report, citing data from the State Administration of Foreign Exchange.

Pursuing its pivot away from the USD, Chinese global transactions using American dollars dropped between February and last month by 1.9% - from 48.6% to 46.7.

As the Americans increasingly used their banknote as a tool to extend hegemony using sanctions and other restrictions to "non-obedient" countries, Beijing and other Global South powers have been adopting local currencies, or yuan, to settle transactions at an exponential rate.

The shift from the USD has been a policy pillar of newly emerging international bodies such as BRICS and SCO, as nations further aim to create alternative trade and monetary bodies to ones dominated and influenced directly by the United States, having exploited these international organizations to extend its hegemony and colonization in vast parts of the world.

The volume of cross-border trade payments includes both current and capital accounts, the report added.

Earlier in March, China and Brazil struck a deal to ditch the US dollar in their bilateral transactions, which is expected to reduce investment costs and develop economic ties between the two countries.

During his visit to China earlier this month, Brazilian President Luiz Inacio Lula da Silva called on countries of the Global South to work toward dropping the USD in their international trade and resort to their own currencies instead.

The Brazilian leader also urged BRICS nations to establish a common currency as the basis of trade, a voice echoed by many leaders of Global South leaders.