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CURRENCY SWAP AGREEMENT (BRAZIL AND CHINA)
Brazil and China sealed a $30bn currency swap agreement that acts as a backstop to growing trade between the two countries. They have signed a currency swap deal, designed to safeguard against future global financial crises. It is an important step forward in BRICS “currency swap diplomacy”. The BRICS have been pushing for a more international role for their currencies, in order to promote as an alternative to the US dollar as a global reserve currency. The agreement was signed in March 2013 on the sidelines of the fifth BRICS (Brazil, Russia, India, China and South Africa) summit in Durban, South Africa.
The deal guarantee the flow of Brazil’s growing soy, iron ore and other exports to China and China’s imports of manufactured goods to Brazil regardless of global financial conditions. The idea is that the central banks of the two trading partners are to swap local currency worth up to 190 billion Renminbi-Yuan or 60 billion reais ($30 billion) in case turmoil hits the global financial system.
Editor: Giovanni AVERSA
