China-Brazil Trade Milestone: First Local Currency Transaction
China and Brazil recently marked a significant progression in their trade ties by successfully completing a transaction entirely in their respective local currencies. This breakthrough was facilitated by the Bank of China (BOC).
Eldorado Brasil, a leading Brazilian paper pulp firm, was at the center of this development. BOC assisted the company in handling a renminbi (RMB) based letter of credit discounting, swiftly converting it to Brazilian reais and depositing it into Eldorado’s account.
This advancement was built upon an agreement from August, where Eldorado Brasil and a Chinese importer decided to denominate their business contract in RMB and utilize the Chinese currency for trade settlements.
For the first time in China-Brazil trade history, the entire transaction was RMB-based. This involved using the RMB for denomination, settlement, financing, and the direct conversion from RMB to Reais.
Earlier in April, both nations had decided to conduct trade in their local currencies, sidestepping the US dollar.
To support this currency shift, the BOC is aiding Brazilian companies in setting up offshore RMB accounts. This allows them to accept payments in RMB from Chinese importers and purchase machinery from China using the RMB. The BOC remains committed to expanding the adoption of RMB in Brazil and continues to introduce innovative RMB-based business processes and products. The aim is clear – to further encourage Chinese and Brazilian entities to trade in their native currencies.
