Friday, June 22, 2012

China's Latest Swap Agreement is with Brazil

Some call this currency swap deal, between China and Brazil, to be the biggest one yet by China with a value of about $30 billion. The swap deal is part of a broad, long term bilateral cooperation between the two countries.

Since I have been keeping track, this is the first swap agreement China has entered with another member nation of BRICS, the others being Russia, India and South Africa.

Of course, while China has no formal swap agreement with Japan, their publicly announced agreement to settle their trade in their own currency and bypass converting into dollars is potentially a much bigger deal than the swap deal with Brazil just by virtue of the magnitude of their bilateral trade, well north of $300 billion annually.

Many have speculated on the significance of China's gradual introduction of the renminbi as an international currency.

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