Brazil, China strike deal to ditch dollar in trade transactions

Brazil and China have struck a deal to ditch the U.S. dollar in exchange for their own currency in trade transactions.

The new arrangement is expected to reduce costs and promote greater bilateral trade and promote investment, according to the Brazilian Trade and Investment Promotion Agency ApexBrasil. China is the largest trading partner in the world, accounting for more than a fifth of all imports, followed by the United States, according to the latest figures. China is the largest export market in Brazil, accounting for more than a third of all exports.

In 2009, China overtook the United States as Brazil's top trading partner. Brazil is the largest recipient of Chinese investment in Latin America, due to spending on high-tension electricity transmission lines and oil extraction.

Brazilian President Luiz da Silva, who was sworn in on January, has moved to strengthen ties with Beijing after a period of rocky relations under his predecessor Jair Bolsonaro, who used anti-China rhetoric on the campaign trail and office.

Brazil's leftist president was due to visit Beijing last weekend and had to cancel his trip after contracting pneumonia. A delegation of ministers, senators, lawmakers and hundreds of business people, including more than 100 from the agricultural sector, had been set to accompany Lula during his first state visit since taking office.