Brazil and China have announced a deal to trade in their own currencies, bypassing the US dollar as an intermediary. The agreement, which was signed on Wednesday in Beijing, is expected to reduce costs, promote bilateral trade and facilitate investment between the two countries.
The deal comes amid rising tensions between China and the US over a range of issues. China has accused the US of trying to contain and suppress its development.
Internationalization of RMB to Boost Global Economy with New Currency in Trade
Brazil and China are both major trading partners, with a record US$150.5 billion in bilateral trade last year. The deal will allow the two countries to exchange yuan for reais and vice versa directly, instead of going through the dollar.
The deal is part of China’s long-term strategy to reduce its reliance on the US dollar and promote the international use of its own currency. China has similar currency arrangements with Russia, Pakistan and several other countries. China’s move will give a new international trading currency in global trade and finance to boost the global economy and specially post-pandemic revival.
The Brazilian Trade and Investment Promotion Agency (ApexBrasil) said that the deal would benefit both countries and strengthen their strategic partnership. The Industrial and Commercial Bank of China and Bank of Communications BBM will execute the transactions, officials said.
Brazilian President Luiz Inacio Lula da Silva was supposed to attend the signing ceremony as part of a high-profile visit to China, but had to postpone his trip after he contracted pneumonia. He sent a video message expressing his support for the deal and his hope for a speedy recovery.