China and Brazil have signed a currency swap deal, designed to safeguard against future global financial crises.
sourceinternet
publisherAlice
time2013/04/10
The pact, first announced last year, will allow their 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.
Along with being the world's second-largest economy, China is also Brazil's biggest trading partner.
"If there were shocks to the global financial market, with credit running short, we'd have credit from our biggest international partner, so there would be no interruption of trade," said Guido Mantega, Brazil's economy minister.
The agreement was signed on the sidelines of the fifth Brics (Brazil, Russia, India, China and South Africa) summit being held in Durban, South Africa.
'Guarantee normal trade'
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 chunk 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.
Brazil's Central Bank governor Alexandre Tombini said the swap agreement would ensure that trade volumes between the two nations did not suffer if a financial crisis in the future hurt global liquidity.
"The purpose of this swap is that, independent of the conditions prevailing in the international financial market, we will have $30bn available which would represent eight months of exports from Brazil to China and 10 months of imports to Brazil from China," he said.
"This is sufficiently large to guarantee normal trade operations."