Mar. 27 – China and Brazil have signed an agreement on a swap line allowing them to trade approximately US$30 billion of goods per annum in their own currencies. This move will cut their current bilateral usage of the United States (U.S.) dollar as a trading currency in half.
The agreement, which is expected to be implemented from Q3 of this year, will be valid for three years, and was signed just before the commencement of the BRICS summit in Durban, South Africa.
Nearly half of Brazils exports to China are in iron ore and related products, while soya and soya products make up about a fifth of total exports. China’s biggest exports to Brazil are electrical equipment and machinery.
Brazilian Economic Minister Guido Mantega affirmed that this deal will act as a buffer against the volatility of international financial markets, which is dominated by the U.S. dollar.
“If there were shocks to the global financial market, with credit running short, we’d have credit from our biggest international partner, so there would be no interruption of trade.”