The Brazilian government announced on Wednesday that it reached an agreement with China to abandon the dollar and use local currencies in bilateral trade relations.
The deal would allow China, the biggest challenger to US economic dominance, and Brazil, Latin America’s biggest economy, to carry out their huge trade deals directly and exchange yuan for reais and vice versa, instead of relying on the dollar.
“There is an expectation that this will reduce costs (…) and further promote bilateral trade and promote investment,” the Brazilian Trade and Investment Promotion Agency (ApexBrasil) said in a statement.
China is Brazil’s biggest trading partner, with trade between them totaling around US$150 billion last year.
The deal was announced during a high-level China-Brazil business forum in Beijing and follows an initial deal in January. Brazilian President Luiz Inácio Lula da Silva was due to attend the forum, but had to postpone his visit to China due to pneumonia.
Industrial and Commercial Bank of China and BBM Bank will handle the transactions, officials said. China has also rejected dollar-denominated deals with Russia, Pakistan and several other countries.
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