© Reuters. Brazil and China take the first steps to trade in local currencies
Brasilia, March 29 (.).- Brazil and China took the first steps on Wednesday to establish bilateral trade in local currencies, excluding the dollar, as announced by the state-owned Brazilian Agency for the Promotion of Exports and Investments (Apex).
The two initial agreements to implement the mechanism were signed during the Brazil-China Economic Seminar, held in Beijing with the participation of representatives from both countries and some 500 businessmen.
The first of them establishes that the Brazilian bank BBM, based in the city of Salvador and controlled by the Chinese Bank of Communications (HK:) (BoCom), enters the CIPS (China Interbank Payment System), the alternative of the Asian country to Swift International.
“The expectation is the reduction of costs of commercial transactions with direct exchange between the real and the yuan” and the BBM will be the “first direct participant of this system in South America,” said an Apex statement.
Likewise, it was agreed that the Brazilian branch of the Industrial and Commercial Bank of China (OTC:) (ICBC (HK:), for its acronym in English) “begins to act as a clearing bank for the yuan in Brazil.”
Chile and Argentina have similar agreements with the ICBC to access Chinese credits for infrastructure improvements.
“The reductions in the restrictions on the use of the yuan are intended to further promote bilateral trade and facilitate investment with the yuan,” the Apex added.
China recently signed similar agreements with Saudi Arabia and Russia, hoping to increase the yuan’s share of world trade, currently estimated at 2%.
The secretary of International Relations of the Ministry of Finance, Tatiana Rosito, told Brazilian journalists at the end of the seminar that the “initial step” allows “greater predictability of exchange rates” and “reduces transaction costs.”
In the seminar, in which another 18 agreements were signed in different areas, the Brazilian Minister of Agriculture, Carlos Fávaro, and the Vice Minister of Commerce of China, Guo Tingting, also participated.
The meeting was part of the schedule parallel to the official visit that Brazilian President Luiz Inácio Lula da Silva would make to the Asian country these days, who canceled the trip at the last minute due to pneumonia.
Since 2009, China has been Brazil’s main trading partner and in 2022, according to Apex, the trade flow reached 150.5 billion dollars and a surplus for the South American country of 29 billion dollars.
