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Brazil and Argentina will discuss a common currency

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

“We intend to overcome the barriers to our exchanges, simplify and modernize the rules and encourage the use of local currencies”, specifies the text published on the Argentinian site Perfil.

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

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

Lula chose Argentina for his maiden international trip since taking office, following the tradition of visiting Brazil’s biggest trading partner in the region first. This follows four years of strained relations under the government of right-wing ex-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 under orders from Bolsonaro, who refused to participate in the group. regional due to the presence of Cuba and Venezuela. .

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

The leaders also pointed to the strengthening of the Mercosur trading bloc, which includes Argentina, Brazil, Paraguay and Uruguay, and whose abandonment Brazilian Finance Minister Haddad recently lamented in recent years.

“Together with our partners, we want Mercosur to be a platform for our effective integration in the world, through the joint negotiation of balanced trade agreements that meet our strategic development objectives,” the two presidents said.

Earlier today, 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 that Brazil suggests calling the “sur” (south) could boost regional trade and reduce dependency against the US dollar, FT reported citing officials. .

Politicians in both countries previously discussed the idea in 2019, but were rebuffed by Brazil’s central bank at the time.

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

Reporting by Lisandra Paraguassu; Additional reporting by Jyoti Narayan in Bengaluru; Editing by Tomasz Janowski, Diane Craft and Chris Reese

Our standards: The Thomson Reuters Trust Principles.

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