Brazil and China to set up currency exchange mechanism for up to US$30 billion

22 June 2012

Brazil and china signed a protocol of intentions to set up a swap mechanism that makes it possible to for each of the countries to use the other’s currency up to a total of 60 billion reals (US$30 billion), the Brazilian Finance Minister said Thursday in Rio de Janeiro.

According to the Brazilian press, Minister Guido Mantega said that the swap mechanism was part of a wider agreement signed by the two countries, which included increasing the number of available places at universities for exchange students and setting up a partnership to launch weather satellites.

The mechanism, the minister said, will allow the two governments to have access to an additional reserve if investment resources are lacking in case of a potential worsening of the international crisis.

“The measure boosts our financial situation as well as China’s, and two-way trade will continue to work as we will have cash credit available to us,” said Mantega, adding that each of the countries can take out the cash either in reals or yuan from the Brazilian and Chinese central banks up to a limit of US$30 billion.

The Minister called for the BRICS countries (Brazil, Russia, India, China, and south Africa) to “share this economic dynamism,” at a time when the crisis in Europe is “getting worse.” (macauhub)