A step towards the internationalisation of the Chinese currency has been accomplished with the completion of the first cross-border commercial loan in Brazil denominated in yuan. The Industrial and Commercial Bank of China (ICBC) and the Bank of Communications (BoCOM) jointly provided the credit; ICBC provided a 300 million yuan loan and BoCOM provided a one billion yuan loan ($137 million). The money is going to be used to run Brazil’s Sao Simao Hydroelectric Power Station. Given Brazil’s current interest rates and currency conversion expenses, the transaction is predicted to save nearly 60 million yuan in financing expenditures. China and Brazil have enhanced their bilateral trade cooperation, encouraging the exchange of local currencies.
The yuan is currently the fifth-largest currency in the world for reserves, payments, and trading, and the third-largest currency in the world for trade financing.
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