China Continues Moves Against the Dollar

During a visit to Beijing by the Brazilian President Luiz Inácio Lula da Silva, members of the President's party and Brazilian bank officials have stated that Brazil and China are preparing to use their respective currencies in trade dealings between the two nations, a move which would replace the Dollar.
 
Most analysts are seeing this news as a continuation of recent Chinese moves to undermine the position of the Dollar as the world's primary reserve currency. China has become increasingly worried by America's current plan to spend our way out of the recession. But so far, their actions in this direction have been little more than cautionary, proposing a clunky, ill-formulated plan to extend the International Monetary Fund's Special Drawing Rights, a form of intermediate currency.
 
Instead of cautionary rhetoric, this new agreement would be a practical move for a nervous Chinese state bank already overloaded with dollars, and dovetails nicely with news from earlier this month when China passed the US to claim its status as Brazil's #1 trading partner. China will be able to diversify its holdings with Brazilian Reals, as the Brazilian economy is showing fast signs of recovery, with Brazilian exports to China already rebounding.
 
This deal will likely have little immediate impact on the supremacy of the Dollar as a reserve currency, but if the deal is finalized and turns out to be a success, there may be a proliferation of direct agreements in this vein (Brazil already has a similar arrangement with neighbor Argentina). In the meantime, Young Professionals working internationally need to be aware that foreign industries and governments are actively searching for ways to untangle themselves from our debt.