Brazil and Argentina to discuss common currency, boost regional trade

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Brazil and Argentina are mooting the use of a common currency “that can be used for both financial and commercial flows, reducing costs operations.” The announcement was made in a joint statement by Brazilian President Luiz Inacio Lula da Silva and Argentine leader Alberto Fernandez quoted by Argentinian media outlet Perfil, reported Reuters. 

This is a positive development between the South American neighbours as the relations between the two nations had suffered a blow under former Brazilian right-wing President Jair Bolsonaro. 

“We intend to overcome the barriers to our exchanges, simplify and modernise the rules and encourage the use of local currencies,” said the statement. 

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

Argentina is Brazil’s largest trade partner and this plan, which will be discussed at a summit in Buenos Aires this week, will be a win-win situation. As per officials cited by Financial Times, the use of a new common currency will lessen the reliance of South America on the US dollar and give an impetus to regional trade. 

Lula’s win in the most contentious Brazil elections is likely to bolster the country’s ties with its neighbour Argentina. President Lula chose Argentina for his inaugural international trip after taking office, which is perceived as a step towards the revival of the Community of Latin American and Caribbean States (CELAC) direction. Bolsonaro during his tenure refused to join the bloc in 2019 due to the presence of Cuba and Venezuela in it. 

Another bloc that the leaders are vowing to take back on speed track is Mercosur trade bloc which includes Argentina, Brazil, Paraguay and Uruguay. 

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

(With inputs from agencies)

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