BRASILIA (Realist English). Brazil and China have reportedly struck a deal to ditch the U.S. dollar in favor of their own currencies in trade transactions, Fox Business reports.
The deal, announced Wednesday, will enable China and Brazil to carry out trade and financial transactions directly, exchanging yuan for reais – or vice versa – rather than first converting their currencies to the U.S. dollar.
The new arrangement is expected to “reduce costs” and “promote even greater bilateral trade and facilitate investment.”
China is Brazil’s largest trading partner, accounting for more than a fifth of all imports, followed by the United States, according to the latest figures. China is also Brazil’s largest export market, accounting for more than a third of all exports.
China overtook the United States as Brazil’s top trading partner in 2009. Today, Brazil is the largest recipient of Chinese investment in Latin America, driven by spending on high-tension electricity transmission lines and oil extraction.
From 2008 to 2021, Beijing spent $240 billion to help 22 developing countries as part of the “One Belt, One Road” logistics infrastructure initiative.
