Start of RMB Internationalization... First Trade Settlement with Brazil

Yuan Expands Territory from Russia to Brazil

China has conducted its first trade transaction settlement with Brazil using the yuan. This move reflects China's effort to elevate the yuan's status as an international currency capable of rivaling the US dollar.

On the 5th, China's state-run Xinhua News Agency reported that Brazilian pulp industry company 'Eldorado Brasil' completed a transaction settled in yuan on the 28th of last month, involving the export of 43 crates of pulp from the port of Santos, Brazil, to the port of Qingdao, China, in August.

Eldorado Brasil agreed with the Chinese side in August to settle payments in yuan and designated the Bank of China’s Brazil branch as the receiving bank, after which a payment test was conducted. The bank received a letter of credit issued by the importer, verified the shipping documents, notified Eldorado Brasil, and the transaction was finalized on the 28th of last month when the yuan payment was converted into Brazilian real.

This transaction was promoted following Brazilian President Luiz In?cio Lula da Silva’s visit to China in April, when the two countries signed a memorandum of understanding between their finance ministries to strengthen trade using their own currencies. Xinhua emphasized that this is the first case in China-Brazil trade history where pricing, settlement in yuan, and conversion to real were conducted in a 'one-stop' process.

Meanwhile, China is intensifying efforts to expand the use of the yuan in trade transactions with various countries to counter the dominance of the US dollar. A significant catalyst was the exclusion of major Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) international payment network following Russia’s invasion of Ukraine last year. Starting with Russia, the volume of payments through China’s Cross-Border Interbank Payment System (CIPS) is increasing not only in Argentina and Brazil but also in Middle Eastern countries.

[Image source=Yonhap News]

This content was produced with the assistance of AI translation services.