On Friday, the Central Bank of Brazil announced that the Chinese yuan, also known as the renminbi, has overtaken the euro to become the country’s second-largest international reserve currency. According to the “International Reserve Management Report” released by the central bank on its official website, the yuan’s share of Brazil’s international exchange reserves has increased, reflecting the deepening economic ties between Brazil and China, its largest trading partner.
As of the end of 2022, the proportion of the yuan in Brazil’s international exchange reserves had reached 5.37%, exceeding the euro’s 4.74%. The yuan became one of Brazil’s international exchange reserve currencies in 2019. However, the US dollar still dominates Brazil’s foreign exchange reserves, accounting for 80.42%.
The central bank noted in the report that Brazil’s total international reserves fell from $362.2 billion in 2021 to $324.7 billion in 2022 due to losses in portfolio returns amid US Federal Reserve rate hikes and dollar appreciation. The report also highlighted the importance of diversifying international reserves to mitigate risks.
The increasing use of the yuan in international trade and investment has contributed to its rise as a reserve currency. The yuan’s growing internationalization is also part of China’s broader efforts to promote the currency’s global role and reduce reliance on the US dollar.
Brazil and China have strengthened economic ties in recent years, with China becoming Brazil’s largest trading partner in 2009. The two countries have also signed agreements to increase cooperation in areas such as infrastructure, energy, and technology. The yuan’s rising share of Brazil’s international exchange reserves reflects the growing importance of the China-Brazil economic relationship.