Brazil and Argentina to trade in local currency
Brazil’s finance minister, Guido Mantega, has revealed that the Central Banks of Brazil and Argentina have signed an agreement allowing them to trade using the Brazilian Real and the Argentinean Peso as of October 6, on an experimental basis. The agreement was signed by Brazil’s President, José Inácio Lula da Silva, and Argentina's President, Cristina Fernández de Kirchner.
According to Mr Mantega, trading in local currency will be beneficial, particularly when small companies are involved. He also believes the agreement may eventually be extended to other countries in the block.
“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 anymore,” he says. “This decision shall, in the long run, lead us to one Mercosur currency, which we should already have. This is just a first step,” he explains.
Trade between Brazil and Argentina totals $25 billion a year, and Argentina is Brazil’s third largest commercial partner.
