Brazil and Argentina will discuss a common currency

Brazil and Argentina will discuss a common currency

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BUENOS AIRES, Jan 22 (Reuters) – Brazil and Argentina are seeking greater economic integration, including the development of a common currency, Brazilian President Luiz Inacio Lula da Silva and Argentine leader Alberto Fernandez said in a joint paper they wrote.

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

“We have also decided to advance discussions on a common South American currency that can be used for both financial and trade flows, reducing the cost of operations and our external vulnerability,” the article said.

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

Lula chose Argentina for his first international trip since taking office, following the tradition of first visiting Brazil’s largest trading partner in the region. It follows four years of strained relations under the government of former Brazilian right-wing 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.

Both presidents stressed the need for good relations between Argentina and Brazil to strengthen regional integration, according to the article.

The leaders also emphasized strengthening the Mercosur trade bloc, which includes Argentina, Brazil, Paraguay and Uruguay, and which Brazilian Finance Minister Haddad recently lamented had been abandoned in recent years.

“Together with our partners, we want Mercosur to be a platform for our effective integration in the world by jointly negotiating balanced trade agreements that meet our strategic development goals,” the two presidents said.

Earlier in the day the Financial Times reported neighboring nations will announce this week that they are beginning preparatory work on a common currency.

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

Politicians from both countries discussed the idea back in 2019, but then met with pushback from Brazil’s central bank.

Initially starting as a bilateral project, the initiative will later be expanded to invite other Latin American nations, the report said, adding that an official announcement is expected during Lula’s visit to Argentina, which begins Sunday evening.

Reporting by Lisandra Paraguasu; Additional reporting by Jyoti Narayan in Bengaluru; Editing by Tomasz Janowski, Diane Kraft and Chris Rees

Our standards: Thomson Reuters Trust Principles.

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