As part of American strength around the globe, the United States dollar has been the standard currency of global trade for decades. But that may soon be changing.
Barron’sreports that China and Brazil have reached a deal to trade in their own currencies, ditching the US dollar as an intermediary, the Brazilian government said Wednesday, Beijing’s latest salvo against the almighty greenback.
The deal will enable China, the top rival to US economic hegemony, and Brazil, the biggest economy in Latin America, to conduct their massive trade and financial transactions directly, exchanging yuan for reais and vice versa instead of going through the dollar.
“The expectation is that this will reduce costs… promote even greater bilateral trade and facilitate investment,” the Brazilian Trade and Investment Promotion Agency (ApexBrasil) said in a statement.
According to Fox Business, “China is Brazil’s largest trading partner, accounting for more than a fifth of all imports, followed by the United States, according to the latest figures. China is also Brazil’s largest export market, accounting for more than a third of all exports.
China overtook the United States as Brazil’s top trading partner in 2009. Today, Brazil is the largest recipient of Chinese investment in Latin America, driven by spending on high-tension electricity transmission lines and oil extraction.
Brazilian President Luiz da Silva, 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 in office.
Brazil’s leftist president was scheduled to visit Beijing last weekend by had to cancel his trip after contracting pneumonia. A delegation composed 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.”
China has long been trying to weaken the dollar, and it’s been helped by the incompetence of the current resident of the White House. The Washington Examiner explained, “Since President Richard Nixon blew up the gold standard in 1971, the value of the U.S. dollar has depended solely on the full faith and credit of the federal government. Thanks to the aggression of the Federal Reserve’s aggressive monetary contraction, the greenback has soared in the foreign exchange market, but the crucial component contributing to the dollar’s value (its sheer dominance of use across the globe) is being actively undermined by the White House.
President Joe Biden’s deliberate attempts to insult Saudi Crown Prince Mohammed bin Salman and his refusal to unleash domestic oil manufacturing have led the dollar to clear the way for the ascent of the Chinese yuan. Not only is Saudi Arabia now considering adopting the Communist Party’s currency for its oil trades, but France has already begun to do so.
In a blink-if-you-miss-it headline from Beijing, the Shanghai Petroleum and Natural Gas Exchange announced that for the first time ever, a Chinese oil company had completed a yuan-settled liquefied natural gas trade through the exchange. The trading partner in question was not an enemy of Washington but rather our oldest ally. However noble the American campaign to convince her allies to bypass Russian oil markets, it has pushed our European allies, France included, into reliance on Chinese oil.
The Shanghai Exchange revelation is just the tip of the iceberg. Across the planet, the CCP has eagerly filled the void left by Biden’s mystifying foreign policy. Since its invasion of Ukraine, Russia has replaced its greenbacks and euros with yuan. This process of ‘dedollarization’ explicitly aims to unseat the dollar as the reserve currency of Russia and, in the long run, that of the world.”