No more trading in Benjamins.
Brazil and China sparked a global conversation with its move to ditch trade in US currency.
The deal, announced on March 29, will see China considered the top rival to US economic hegemony and South America’s biggest oil producer conducting trade and financial transactions directly, exchanging yuan for reais and vice versa.
The Brazilian Trade and Investment Promotion Agency (ApexBrasil) said in a statement, “The expectation is that this will reduce costs… promote even greater bilateral trade and facilitate investment.”
China booted out the US and became Brazil’s largest trading partner in 2009, with a record US$150.5 billion (R$200 billion) in bilateral trade last year. China is also Brazil’s largest export market, accounting for more than a third of all exports.
The deal reportedly follows an initial agreement in January, after a high-level China business forum in Beijing.
China has similar currency deals with Russia, Pakistan and several other countries. The Industrial and Commercial Bank of China and Bank of Communications BBM will execute the transactions, officials said.
Brazilian President Luiz da Silva, sworn in on January, has moved to strengthen ties with Beijing after a period of rocky relations under his predecessor, Jair Bolsonaro, who used anti-China rhetoric on the campaign trail and in office.
But what does this mean for trade between both nations and other countries?