Currency deal guarantees Brazil-China trade: Brazil's CB

DURBAN, South Africa -- The currency-swap agreement of Brazil and China signed Tuesday will guarantee bilateral trade over the coming years, Brazil's Central Bank governor Alexandre Tombini said.

At a press conference in Durban after the signing, Tombini said the agreement ensures trade flows between the two even if the global economy worsens.

"The goal of this swap agreement is to facilitate trade between the two countries, independently of international financial conditions," Tombini said.

"This is an important step in the strengthening of trade and financial ties between Brazil and China," he added.

Swap contracts to do business in national currencies are currently common among countries.

The agreement, signed between Brazil's Central Bank and the People's Bank of China, will be valid for three years, with the option of an extension, and allows for up to 60 billion Brazilian reals or 190 billion Chinese yuan ($30 billion) of trade in their respective currencies.

The currency-swap agreement will mainly be used to promote trade, allowing each central bank to extend credit lines to other banks to finance trade between both countries.

"There are a series of available credit lines for exporters and importers in both territories," he said.

The agreement also guarantees trade volume independently of the situation of the international financial market.

"We will have this swap line of $30 billion, which today are equivalent to 8 months of exportation from Brazil to China and 10 months of importation, a line that is large enough to make our trade operations function normally, regardless of the situation of the international financial market," he said.

Tombini added the agreement does not affect Brazil's foreign reserves.