February 8, 2023

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Brazil and Argentina to discuss the single currency

BUENOS AIRES (Reuters) – Brazilian President Luiz Inacio Lula da Silva and Argentine Alberto Fernandez said in a joint article that Brazil and Argentina aim for greater economic integration, including the development of a common currency.

“We intend to overcome barriers to our exchanges, simplify and modernize the rules and encourage the use of local currencies,” says the text posted on the Argentine Perfil website.

“We also decided to advance discussions on a common South American currency that can be used for both financial and trade flows, and to reduce our operational costs and external vulnerabilities,” the article said.

The idea of ​​a single currency was originally raised in an article written last year by Fernando Haddad and Gabriel Gallipolo, Brazil’s current finance minister and executive secretary, respectively, and mentioned by Lula during the campaign.

Lula chose Argentina for his inaugural international trip since taking office, in keeping with the tradition of his first visit to Brazil’s largest trading partner in the region. This comes after four years of strained relations during the government of former Brazilian President Jair Bolsonaro.

Lula’s trip to neighboring Argentina also marks Brazil’s return to the Community of Latin American and Caribbean States (CELAC), which Brazil left in 2019 at the behest of Bolsonaro, who refused to participate in the regional group due to the presence of Cuba and Venezuela. .

The two presidents stressed the need for a good relationship between Argentina and Brazil to promote regional integration, according to the article.

The leaders also emphasized the strengthening of Mercosur’s trade bloc, which includes Argentina, Brazil, Paraguay and Uruguay, which Brazilian Finance Minister Haddad regretted abandoning in recent years.

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“With our partners, we want Mercosur to constitute a platform for our effective integration into the world, through joint negotiations of balanced trade agreements that respond to our strategic development goals,” the two presidents said.

Earlier today, the Financial Times mentioned Neighboring countries will announce this week that they have begun preparatory work on the single currency.

The plan, due to be discussed at a summit in Buenos Aires this week, will focus on how a new currency that Brazil proposes to call “sur” (South) could boost regional trade and reduce dependence on the US dollar, the Financial Times reported, citing officials. .

Politicians from both countries already discussed the idea in 2019, but faced opposition from Brazil’s central bank at the time.

The initiative, which initially started as a bilateral project, will later be extended to invite other Latin American countries, the report said, adding that an official announcement is expected during Lula’s visit to Argentina, which begins Sunday evening.

(Reporting by Lisandra Paraguaso) Additional reporting by Jyoti Narayan in Bengaluru. Editing by Tomasz Janowski, Diane Kraft, and Chris Rees

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