April 2—While China and Brazil have just made an agreement to settle their trade in China’s yuan currency and make it a credit and lending currency in Brazil’s economy, both countries have been rapidly selling off their central banks’ large holdings of U.S. Treasury securities, as the Russian Central Bank did earlier when it loaded up on gold and yuan. During 2022 Brazil sold off $22 billion worth—almost 10% of its U.S. Treasury holdings—and then another $21 billion just in March 2023. China sold off $175 billion in Treasuries in 2022 and has reduced its once-huge holdings of them by more than a quarter. U.S. dollar assets are still an 80%—but rapidly diminishing—share of the foreign exchange reserves of Brazil’s central bank, Chinese yuan assets only 5.4% but it is rising fast and becoming Brazil’s main trade currency. The yuan’s share in Russia’s central bank reserves is approaching 30%.
