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| Beijing has been trying to push the yuan as an alternative global reserve currency |
China and
Brazil have agreed a currency swap deal in a bid to safeguard against any
global financial crisis and strengthen their trade ties.
It will
allow their respective central banks to exchange local currencies worth up to
60bn reals or 190bn yuan ($30bn; £19bn).
The amount
can be used to shore up reserves in times of crisis, or towards boosting
bilateral trade.
China is
Brazil's biggest trading partner.
"As
international credit remains scarce, we will have enough credit for our
transactions," Brazil's Finance Minister, Guido Mantega, said.
A global
yuan?
The
agreement is the latest in a series of similar deals signed by China with its
trading partners.
In March
this year, it signed a swap deal with Australia worth up to A$30bn ($31bn;
£20bn) to promote bi-lateral trade and investment.
It has also
inked currency pacts with Hong Kong and Japan.
Analysts
said that Beijing has been trying to push for trade to be settled in yuan,
rather than in US dollars, as part of its plans to seek a more global role for
its currency.
"The
motivation is to be less reliant on the US dollar," Sean Callow, chief currency
strategist at Westpac, told the BBC.
"We
will see firms in the two countries settle their accounts in local
currencies," he added.
Mr Callow
added that with an increasing number of economies signing such agreements with
China, its plans for a more global role for the yuan had received a major
boost.
"It is
a big positive for China on that account."
Closer
cooperation
While trade
between China and Brazil has surged, relations between the two economies have
soured in recent times.
In Brazil,
there have been concerns that increased imports of low-cost goods from China
were hurting the local manufacturing industry.
Beijing, on
the other hand, has accused Brazil of raising taxes on Chinese goods in a bid
to protect the local industry, a move it says hurts its exports.
Brazil has
also levied similar allegations against China.
Despite
these tensions, the two countries have agreed to cooperate in various sectors
to boost bi-lateral trade.
They said
they will work closely in mining, industrial, aviation and infrastructure
development.
The
agreement also comes at a time when growth in China, the world's second largest
economy, has been slowing.
China's
economy grew at an annual rate of 8.1% in the first quarter, the slowest pace
in almost three years. There are concerns that growth may slow further in the
coming months.
However,
Brazil's Finance Minister, Mr Mantega said "China will keep being the
place where to do business".
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