Brazil & China Sign Agreement To Drop US Dollar And Use RMB Yuan – Real In Bilateral Trade
US$150 billion in annual trade will now be settled in respective currencies
Beijing and Brazil have signed an agreement on trade in mutual currencies, abandoning the US dollar as an intermediary, and are also planning to expand cooperation on food and minerals. The agreement will enable the two BRICS members to conduct their massive trade and financial transactions directly, exchanging RMB Yuan for Brazilian Real and vice versa, instead of using the US dollar for settlements.
The Brazilian Trade and Investment Promotion Agency stated that “The expectation is that this will reduce costs, promote even greater bilateral trade and facilitate investment.” China has been Brazil’s largest trading partner for more than a decade, with bilateral trade hitting a record US$150 billion last year.
The countries also reportedly announced the creation of a clearinghouse that will provide settlements without the US dollar, as well as lending in national currencies. The move is aimed at facilitating and reducing the cost of transactions between the two sides and reducing US dollar dependence in bilateral relations.
The People’s Bank of China (PBOC) announced earlier that such arrangements will boost the usage of the RMB Yuan for cross-border transactions between enterprises and financial institutions in the two countries, and further facilitate bilateral trade and investment.
According to Tatiana Rosito, the Secretary for International Affairs at Brazil’s Ministry of Finance, 25 countries are already making settlements with China in RMB Yuan. At current exchange rates, 1 Brazilian Real is valued at 1.34 RMB.