By By Lisandra Paraguassu
BRASILIA (Reuters) – China Development Bank signed a deal on Wednesday to loan 5 billion yuan ($690 million) to Brazil’s National Bank for Economic and Social Development BNDES, marking BNDES’s first foreign currency operation.
The deal, announced during Chinese President Xi Jinping’s visit to Brasilia on Wednesday, was part of a package of 37 agreements across various sectors that marked increasing cooperation between China and Brazil.
The three-year loan will support a BNDES credit line for projects in different areas, the Brazilian bank said in a statement.
BNDES President Aloizio Mercadante said the bank has been intensifying its international operations to diversify funding and boost project lending in Brazil. He added that the loan in Chinese currency offers Brazilian entrepreneurs, particularly exporters, natural exchange rate protection.
This move is seen as an initial step towards expanding alternatives to the dollar, a key objective discussed within BRICS, the bloc of emerging economies that includes China, Brazil, and eight other nations, since its expansion last year.
Brazilian President Luiz Inacio Lula da Silva has been a vocal proponent of creating alternatives to the U.S. dollar for transactions among BRICS countries. At the most recent BRICS summit, Lula emphasized the urgent need for “alternative means of payment for transactions between countries”.
As Brazil assumes the bloc’s presidency, this will be one the main issues to be discussed in the next few months.
($1 = 7.2459 Chinese yuan renminbi)