Dollar dismissed
22/09/2008
The Central Banks of Brazil and Argentina have signed an agreement that authorises the use of the Brazilian real and the Argentinian peso in commercial transactions as of October 6, on an experimental basis. The agreement was signed by the presidents of the two countries, José Inácio Lula da Silva and Cristina Fernández de Kirchner.
According to Brazil’s finance minister, Guido Mantega, trade in local currencies should make it easier for companies on both sides of the border to do business with one another, especially when there are small companies involved in the deals. He added: “It will help local currencies be more valued by eliminating the US dollar that has been used as an intermediary currency up till now. We do not need the US dollar in the middle of our transactions any more.”
He then said the he believed the move was a first step towards establishing a single currency for the Mercosur trading bloc, adding that this was something the countries involved—Argentina, Brazil, Paraguay and Uruguay—ought to have already.
The value of trade between Brazil and Argentina is around $25 billion per year.
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