Brazil and China agree on trade deal to ditch U.S. dollar
According to reports, Brazil and China have reached an agreement to replace the U.S. dollar with their respective currencies in trade transactions. As per the deal announced on Wednesday, the two countries will conduct direct trade and financial transactions by exchanging their currencies, yuan and reais, without the need to first convert them into U.S. dollars.
As per the Brazilian Trade and Investment Promotion Agency (ApexBrasil), the recent agreement is anticipated to bring down expenses and foster greater bilateral trade and investment. The agency stated that this arrangement would pave the way for reduced costs and smoother facilitation of investment and bilateral trade.
The latest data reveals that China is Brazil's biggest trading partner, making up more than one-fifth of all imports, followed by the United States. Additionally, China is Brazil's largest export market, accounting for more than one-third of all exports.
In 2009, China surpassed the United States to become Brazil's leading trading partner. Presently, Brazil receives the most significant Chinese investment in Latin America, primarily driven by expenditure on high-tension electricity transmission lines and oil extraction.
Following a high-level China-Brazil business forum held in Beijing, officials from both countries reached a preliminary agreement in January to replace the U.S. dollar with their own currencies. The agreement was announced after the forum.
Luiz da Silva, who was inaugurated as the President of Brazil in January, has taken steps to enhance the relationship between Brazil and Beijing. This comes after a period of strained ties under his predecessor, Jair Bolsonaro, who used anti-China language during his campaign and while in office.
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