AFP reported that the Brazilian government has announced a deal between China and Brazil to trade in their own currencies, bypassing the US dollar as an intermediary altogether, Zero Hedge reported.

This move marks the latest effort by Beijing to challenge the dominance of the greenback, and allows China and Brazil, whose trade amounts to $150 billion per year, to conduct financial transactions directly by exchanging yuan for reais and vice versa.

This deal extends China’s bilateral, USD-exempting currency arrangements to include the largest economy in Latin America, going beyond previous agreements with countries such as Russia, Pakistan, and Saudi Arabia.

“The expectation is that this will reduce costs… promote even greater bilateral trade and facilitate investment,” the Brazilian Trade and Investment Promotion Agency (ApexBrasil) said in a statement, as reported by Zero Hedge.

Brazil’s trade with China hit a record high of US$150.5 billion (S$200 billion) last year, making China its largest trading partner.

Following a preliminary agreement in January, the two countries announced a deal to trade in their own currencies, bypassing the US dollar, at a high-level China-Brazil business forum in Beijing.

Written by staff