Ditch the buck agreements have been coming fast and furious. There’s no denying the importance of this one, between countries with the second and twelfth largest economies. From Tyler Durden at zerohedge.com:
In a time when de-dollarization news are dropping fast and furious and even Elon Musk is now jumping on a bandwagon…
… which we first defined a decade ago, not a day goes by without some modest or not so modest shift toward a world in which the US currency – fully weaponized after February 2022 for the entire world to see and fear – is no longer the world’s reserve. And today was no exception.
According to the Brazilian government, China and Brazil have reached a deal to trade in their own currencies, ditching the United States dollar as an intermediary entirely, AFP reported.
The deal, Beijing’s latest salvo against the almighty greenback, will enable China, the top rival to US economic hegemony, and Brazil, the biggest economy in Latin America, to conduct their massive trade which amounts to $150 billion per year, and financial transactions directly, exchanging yuan for reais and vice versa instead of going through the US dollar. In doing so China extends its bilateral, USD-exempting currency arrangements beyond countries such as Russia, Pakistan and Saudi Arabia to now include the Latin American exporting powerhouse.
“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.