Brazil’s Lula calls for end to dollar trade dominance

Brazil’s president Luiz Inácio Lula da Silva has called on developing countries to work towards replacing the US dollar with their own currencies in international trade, lending his voice to Beijing’s efforts to end the greenback’s dominance of global commerce, Financial Times reports.

Kicking off his first state visit to China since taking office in January 2023, Lula called for the countries of the so-called BRICS group of nations — which in addition to Brazil and China includes Russia, India and South Africa — to come up with their own alternative currency for use in trade.

“Every night I ask myself why all countries have to base their trade on the dollar,” Lula said in an impassioned speech at the New Development Bank in Shanghai, known as the “BRICS bank”.

“Why can’t we do trade based on our own currencies?” he added, drawing loud applause from the audience of Brazilian and Chinese dignitaries. “Who was it that decided that the dollar was the currency after the disappearance of the gold standard?”

Lula’s call to shed dollar dependence dovetailed with Beijing’s increasing efforts to promote use of the renminbi in settlement of cross-border commodities trades, as Chinese policymakers seek to strengthen the role of the world’s second-largest economy in the global financial system.

Brazil’s leftist leader has sought to redirect the country’s foreign policy to a more multilateralist stance, with an emphasis not only on good relations with the US — he visited President Joe Biden in February — but also with China and the developing world.

Bilateral trade has ballooned over the past decade to $150.4bn last year, with China buying Brazil’s agricultural commodities and minerals and investing in the Latin American country’s large consumer market and infrastructure sector.

The growing economic relationship has encouraged both countries to promote greater use of their respective currencies in bilateral trade. This week, the Brazilian branch of the state-owned Industrial and Commercial Bank of China settled its first transaction directly in renminbi in the country, Chinese state media reported.