Lula Backs BRICS Currency to Replace Dollar in Foreign Trade

(Bloomberg) -- Brazil’s Luiz Inacio Lula da Silva called on BRICS nations to come up with an alternative to replace the dollar in foreign trade, supporting China’s crusade against US global dominance just as he prepares to meet with President Xi Jinping in Beijing.

Most Read from Bloomberg

• US Embarrassed After 21-Year-Old Arrested in Classified Documents Leak

• Arnault's Wealth Soars to $210 Billion, Leaving Musk in the Dust

• US-Saudi Oil Pact Breaking Down as Russia Grabs Upper Hand

• US Arrests 21-Year-Old National Guardsman in Classified Documents Leak

• JPMorgan Says Frank’s Javice Moved Millions to a Shell Company

Lula’s remarks were made on Thursday during a visit to the Shanghai-based New Development Bank, an institution created by BRICS countries, which, along with Brazil and China, include Russia, India and South Africa. Former Brazil President Dilma Rousseff is the bank’s new chief executive.

Lea la nota en español.

“Why can’t an institution like the BRICS bank have a currency to finance trade relations between Brazil and China, between Brazil and all the other BRICS countries?” he said. “Who decided that the dollar was the (trade) currency after the end of gold parity?”

Beijing has ramped up efforts to boost the use of its own currency in foreign trade. Last month, Brazil and China took steps to make it easier to settle their foreign trade operations in yuan or reais, with the stated goal of reducing costs by eliminating a third currency from the transactions.

Brazil’s Finance Minister Fernando Haddad, who’s accompanying Lula in his trip to China, said local currencies are already used in bilateral trade through instruments such as credit receipts. The goal, he added, is to expand mechanisms that allow trade operations to be settled without the intermediation of a third currency.

“The advantage is to avoid the straitjacket imposed by necessarily having trade operations settled in a currency of a country not involved in the transaction,” he told reporters in Shanghai.

(Updates with comments from Brazil’s finance minister starting in fifth paragraph.)

Most Read from Bloomberg Businessweek

• A Smart Gun Is Finally Here, But Does Anyone Want It?

• There Are No Fees at America’s Smallest Bank

• Inside the IRS’s Shrinking Band of Wealth Hunters

• The Business of … Death

• A Runner’s Murder in Kenya Opens a Window Into Violence Against Women

©2023 Bloomberg L.P.