China and Brazil have reached a deal to trade in their own currencies, ditching the US dollar as an intermediary, the Brazilian government said on Wednesday, Beijing’s latest salvo against the almighty greenback.
The deal will enable China, the top rival to US economic hegemony, and Brazil, the biggest economy in Latin America, to conduct their massive trade and financial transactions directly, exchanging yuan for reais and vice versa instead of going through the dollar.
“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.
China is Brazil’s biggest trading partner, with a record US$150.5 billion (S$200 billion) in bilateral trade last year.
The deal, which follows a preliminary agreement in January, was announced after a high-level China-Brazil business forum in Beijing.
Brazilian President Luiz Inacio Lula da Silva was originally scheduled to attend the forum as part of a high-profile China visit, but had to postpone his trip indefinitely on Sunday after he came down with pneumonia.
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 several other countries.
Anonymous
PS. The pace of dedollarisation is gaining speed and will turn into an avalanche soon.
You missed the big one. Saudi Arabia is now selling oil to its biggest customers India and China not in the USD.
ReplyDeleteSaudi Arabia selling oil in USD is where term petrodollar originated and gave the free hand to print money to and do anything even though it actually worth 0 with no backing.
When the dollar is no longer the reserve currency, we would see the economic calamity in US that was waiting to happen
Washington is too arrogant to comprehend the new way in which the US is perceived abroad. The world sees the dollar-based reserve currency system as Washington’s punishment device, and the world sees dollar-based debt expanding while demand for dollars declines. The result will be a drop in the foreign exchange value of dollar denominated financial instruments such as stocks and bonds.
ReplyDeleteTo admit that mistakes are being made implies acknowledging that US is on the wrong path and that China, Russia, and those governments aligning with them are on a better course, using their banks for financing industrial wealth instead of acting as brokerage casinos and dealing in financial arbitrage and debt leveraging.
No American policymaker will risk being asked “why do you support the policies of Xi and Putin?” That they, and not us, have the right policy is not a permitted thought.
Link to article:
https://www.unz.com/proberts/why-the-dollar-based-international-system-is-breaking-up/