Beijing and Brasilia have signed an agreement on mutual currency trade, abandoning the US dollar as an intermediary, and plan to expand cooperation in food and minerals.
According to media reports, the agreement will allow the two BRICS members to conduct their massive trade and financial transactions directly, exchanging renminbi for real and vice versa, rather than settling in US dollars.
“The expectation is that this will reduce costs… promote increased bilateral trade, and facilitate investment,” the Brazilian Trade and Investment Promotion Agency said on Wednesday, according to AFP.
The countries also reportedly announced the establishment of a clearinghouse to provide settlements in currencies other than the US dollar, as well as lending in national currencies. The move is intended to facilitate and reduce the cost of bilateral transactions, as well as to eliminate dollar dependence in bilateral relations.
The People’s Bank of China (PBOC) previously stated that such arrangements will increase the use of the renminbi for cross-border transactions between enterprises and financial institutions in both countries, facilitating bilateral trade and investment.
For more than a decade, China has been Brazil’s largest trading partner, with bilateral trade reaching a record $150 billion last year.
According to Tatiana Rosito, the Secretary for International Affairs at Brazil’s Ministry of Finance, 25 countries have already made yuan settlements with China.
