Brazil, Argentina to discuss common currency

Brazil, Argentina to discuss common currency
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BUENOS AIRES, January 22 (Reuters) – Brazilian President Luiz Inacio Lula da Silva and Argentine President Alberto Fernandez said in a joint paper that Brazil and Argentina are aiming for greater economic integration, including the development of a common currency.

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

“We have decided to advance the discussion on a common South American currency that can be used for both financial and commercial flows, reducing operational costs and our external vulnerability,” the article said.

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

Continuing the tradition of visiting Brazil’s largest trading partner in the region for the first time since taking office, Lula chose Argentina for his first international trip. This comes after four years of strained relations during the government of former Brazilian right-wing President Jair Bolsonaro.

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

According to the article, both presidents stressed the need for a good relationship between Argentina and Brazil to strengthen regional integration.

The leaders also stressed the strengthening of the Mercosur trading bloc, which includes Argentina, Brazil, Paraguay and Uruguay, and which Brazilian Finance Minister Haddad complained has been abandoned in recent years.

“Together with our partners, we want Mercosur to create a platform for our effective integration into the world through joint negotiation of balanced trade agreements that respond to our strategic development goals,” both presidents said. said.

Financial Times earlier in the day reported neighboring countries will announce this week that they have started preparatory work on a common currency.

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

Politicians from both countries discussed this idea already in 2019, but at that time it faced a backlash from the Brazilian central bank.

In the report, which stated that the initiative, which started as a bilateral project at the beginning, will later be expanded to invite other Latin American countries, it was also stated that an official announcement is expected during Lula’s visit to Argentina, which will start on Sunday night.

As reported by Lisandra Paraguassu; Additional reports by Jyoti Narayan in Bengaluru; Editing by Tomasz Janowski, Diane Craft and Chris Reese

Our standards: Thomson Reuters Trust Principles.

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