China and Brazil achieve landmark trade in local currency

China and Brazil have successfully traded in their own currencies for the whole process of the transaction, marking a milestone in their bilateral trade relations, according to the Bank of China, a major Chinese lender.

The BOC said in a statement on Tuesday that it has recently helped Eldorado Brasil, a Brazilian paper pulp company, process the renminbi-based letter of credit discounting, which is a short-term credit facility provided by banks, and immediately covert it into Brazilian reais that are deposited in the company’s account.

In August, the Brazilian company agreed with a Chinese importer to use the RMB to denominate their business contract and use the Chinese currency for trade settlement, according to the BOC.

The full process of RMB-based trade transaction involves using RMB for denomination, settlement and financing, and directly exchanging the RMB for reais. This took place for the first time in the China-Brazil trade history, the BOC said.

In April, China and Brazil reached a deal to trade in their own currencies, ditching the US dollar as an intermediary.

The BOC said it is helping Brazilian enterprises open offshore RMB settlement accounts, accept Chinese importers’ payment through RMB, and import machinery equipment from China by using the RMB.

It will continue to increase the Brazilian companies’ awareness and acceptance towards RMB, innovate and optimize business processes as well as enrich relevant products of RMB business, and let more Chinese and Brazilian partners to trade in their own currencies.