The pact will allow both countries respective central banks to swap local currencies worth up to 190bn yuan or 60bn reais. Officials said this will ensure smooth bilateral trade, regardless of global financial conditions.
The deal, signed on the side-lines of the fifth Brics summit in Durban, South Africa, is all the more significant given that China remains Brazil’s largest trading partner.
Trade between China and Brazil has grown robustly over the past few years, with volumes rising from $6.7bn in 2003 to nearly $75bn in 2012. A large amount of this growth has been driven by growing Chinese demand for Brazil's resources, such as iron ore and soy products. Meanwhile, Brazil has also become a key export market for goods manufactured in China.
In 2012, China signed a similar swap deal with Australia worth up to A$30bn to promote bi-lateral trade and investment, while it is also now believed to be looking at currency pacts with Hong Kong and Japan.
