China and Brazil agreed to trade in each other’s currencies just hours ahead of the BRICS summit in South Africa.
The deal, which extends over a three-year period and amounts to an exchange of about $30 billion in trade per year, marks the latest effort among two of the world’s largest emerging economies to shift the dynamics of international trade that have long favored the U.S. dollar.
By shifting some trade away from the U.S. dollar, the world’s primary reserve currency, the two countries aim to buffer their commercial ties against another financial crisis like the one that resulted from the collapse of the U.S. housing market bubble in 2008.
The trade deal comes before a summit of the BRICS nations (Brazil, Russia, India, China and South Africa) in Durban, where the group of five is expected to discuss the establishment of an international development bank.
“BRICS Development Bank will make the global financial sector more democratic,” said Brazil’s Minister for Development, Industry and Foreign Trade Fernando Pimentel, according to Xinhua.
China and has touted the proposed bank as an alternative to international financial institutions like the World Bank, which funds infrastructure and development projects in emerging economies around the world.
Full article: So Long, Yankees! China And Brazil Ditch US Dollar In Trade Deal Before BRICS Summit (International Business Times)