China and Brazil met during the brics summit in South Africa on Tuesday and signed a major currency swap agreement. The People’s Bank of China traded 190 billion yuan for 60 billion Brazilian reals from the Central Bank of Brazil. The trade represents approximately us$30 billion.
Officials say they hope the exchange will ensure normal trade between the two nations despite instability in the global economy.
Brazil’s central bank president, Alexandre Tombini, said the deal represents “eight months of exports from Brazil to China and 10 months of imports to Brazil from China.”
The arrangement represents another push by China to give the yuan a greater international role. Since the 2008 financial crisis, China has signed 15 currency swap deals.
These types of deals reveal that the world is beginning to abandon the U.S. dollar as a global reserve currency. As confidence in the dollar evaporates and China works to undermine America’s economy, the dollar’s value will plummet. For more information read, “World Prepares to Dump the Dollar.” ▪