Brazil, China Ditch US Dollar
By Stefan J. Bos, Chief International Correspondent Worthy News
BRASILIA/BEIJING (Worthy News) – Brazil and China have ditched the U.S. dollar and agreed to trade in their currencies as the greenback rapidly loses its status as the world’s reserve currency.
The deal allows both countries to carry out trade and financial transactions directly, exchanging China’s yuan for Brazil’s reais – or vice versa. They no longer have first to convert their currencies to the U.S. dollar, the Brazilian government said.
The Industrial and Commercial Bank of China and Bank of Communications BBM will execute the transactions, officials said.
China has similar currency deals with Russia, Pakistan, and others, while Saudi Arabia, the world’s leading petroleum exporter, is also in talks with Beijing to use the yuan for global trade
The Brazilian Trade and Investment Promotion Agency (ApexBrasil) said the Brazil-China deal is to “reduce costs” and “promote even greater bilateral trade and facilitate investment.”
Brazilian President Luiz da Silva, sworn-in in January, seeks to strengthen ties with Beijing after rocky relations under his predecessor, Jair Bolsonaro. Critics said Bolsonaro used anti-China rhetoric on the campaign trail and in office.
Brazil’s current leftist president, popularly known as Lula, was scheduled to visit Beijing last weekend, but he said he had to cancel his trip after contracting pneumonia.
LARGE DELEGATION
A delegation of ministers, senators, lawmakers, and hundreds of business people – including more than 100 from the agricultural sector – was due to accompany the president.
It was supposed to be Lula’s first state visit since taking office, underscoring China’s growing economic clout.
China is Brazil’s largest trading partner, accounting for over a fifth of all imports, followed by the United States, according to the latest available trade figures.
China is also Brazil’s largest export market, accounting for more than a third of all exports.
The Communist-run Asian nation overtook the United States as Brazil’s top trading partner in 2009.
Brazil is now the largest receiver of Chinese investment in Latin America due to spending on high-tension electricity transmission lines and oil extraction, experts say.
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