Brazil Makes Deal to Use Yuan Instead of Dollar in Trade With China

After reaching an agreement in January, Brazil and China will now be able to conduct trade directly without the need for US dollars as an intermediary. Instead, transactions will be made using their respective currencies, the Real and the Yuan, through the Industrial and Commercial Bank of China and Brazil’s Bank of Communications BBM.

The accord aims to reduce costs, increase bilateral trade, and encourage investment in both countries, according to a statement from the Brazilian Trade and Investment Promotion Agency.

China has already signed similar deals with other countries such as Pakistan and Russia, and this deal with Brazil shows that the authoritarian regime led by President Xi Jinping is seeking to expand its economic power around the world.

Recently, China made its first-ever Yuan-denominated oil trade, and reports suggest that Saudi Arabia is increasing its investments in the region. These developments have triggered speculations that the countries involved are trying to challenge the US dollar’s hegemony as the dominant global currency.

Despite concerns over the strength of the US dollar, it still holds a firm grip on first place, according to US Global Investors, and any changes in the status quo are unlikely to happen anytime soon.