Photo: Chinese yuan. By: faungg’s photos. Source: Flickr.
On February 7, China’s central bank informed that it signed a memorandum of cooperation with its Brazilian counterpart for the use of the yuan – the Asian country’s national currency – in border transactions. As explained in a brief communiqué, the agreement will streamline the operations of companies and financial institutions in both countries, as well as bilateral trade and investment. In effect, the agreement gives greater strength to the yuan or renminbi as an alternative currency in international business, given the proliferation of U.S. restrictions on the use of the dollar.
The official communiqué also stated that the payment mechanism is “mutually beneficial, timely, reliable and practical,” to better meet the needs of foreign economic and commercial enterprises for the settlement of transactions, investment, financing, and risk management. It is worth noting that in 2022 China sealed a similar document with Laos and that Russia’s Gazprom oil companies and the state-owned China National Petroleum Corporation signed another agreement to pay for energy supplies in their national currencies.
Prensa Latina (2023). China y Brasil acuerdan usar el yuan en operaciones transfronterizas.
RT (2023). China acuerda con Brasil usar el yuan en operaciones transfronterizas.
Find out more:
Yao, K. & Gao, L. (2023). Yahoo!notícias. China diz que estabelecerá acordos de clearing em iuanes no Brasil.