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China, Brazil strike deal to ditch dollar for trade

The Brazilian government announced on Wednesday that China and Brazil have agreed to trade in their own currencies and scrap the US dollar as a middleman - Beijing's latest foray into the almighty greenback.

The agreement allows China, the biggest rival of US economic hegemony, and Brazil, Latin America's largest economy, to conduct their large-scale trade and financial transactions directly by exchanging yuan for reais and vice versa, instead of going through the dollar.

"This is expected to reduce costs, further encourage bilateral trade and facilitate investment," Brazil's Trade and Investment Promotion Agency (ApexBrasil) said in a statement.

China is Brazil's largest trading partner, with bilateral trade hitting a record US$150.5 billion (S$200 billion) last year.

The deal, which follows a tentative agreement in January, was announced after a high-level Sino-Brazilian economic forum in Beijing.

Brazilian President Luiz Inacio Lula da Silva was originally scheduled to attend the forum as part of a high-profile visit to China but had to postpone his trip indefinitely on Sunday due to pneumonia.

The Industrial and Commercial Bank of China and Bank of Communications BBM will conduct the transactions, officials said.

China has similar currency deals with Russia, Pakistan and several other countries.


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