BRAZIL and China made a first-ever trade transaction using the Chinese yuan in a settlement in a closed-loop operation during the whole process of turnover.
This was announced by the Bank of China Brazil S.A., on Monday.
The bank said it successfully handled a Chinese yuan letter of credit discount business for a Brazilian Pulp Enterprise in late September.
In handling the business, the bank immediately exchanged the Chinese yuan payment in the deal for a sum of Brazilian currency real and deposited the real receipt into the enterprise’s account.
CCTV reported that this transaction marked the first time in the history of China-Brazil trade to realize a closed-loop operation during the whole process of yuan pricing, settlement, financing, and direct exchange for the real.
In the first half of 2023, the People’s Bank of China, the country’s central bank, signed a memorandum of understanding on cooperation with the Central Bank of Brazil to establish Chinese yuan clearing arrangements in Brazil, which is expected to help enterprises and financial institutions in the two countries conduct cross-border transactions using the Chinese yuan in accounts settlement, without referring to the U.S. dollar as an intermediary currency.
On March 29, Brazil announced that it would trade with China directly using its own currencies.
China has been Brazil’s largest trade partner for 14 consecutive years, while Brazil is the first Latin American country to reach a trading volume of more than $100-B with China.
This move comes after President Lula Da Silva recently said that he wants to deepen the relations between Brazil and China.
Lula has also been calling for an end to the dollar trade dominance.
