2022 RT Banner.gif

China Daily

News> World> Content
Published: 18:10, January 24, 2023
Lula floats shared 'trading currency' during Argentina trip
By Reuters
Published:18:10, January 24, 2023 By Reuters

Brazilian President Luiz Inacio Lula da Silva gestures at the government house in Buenos Aires, Argentina, as he gives a joint statement with Argentina's President Alberto Fernandez on Jan 23, 2023. (GUSTAVO GARELLO / AP)

BUENOS AIRE - Brazil and Argentina are in early talks to establish a shared unit of value for bilateral trade to reduce reliance on the US dollar, Brazilian President Luiz Inacio Lula da Silva said on Monday, though the move is not aimed at replacing existing currencies.

In Buenos Aires on his first international visit since taking office, Lula made the comments alongside Argentine President Alberto Fernandez, a leftist ally, who said there was little decided about what would be involved in such a proposal.

The discussions surfaced as part of an agreement to boost bilateral trade with more Brazilian export financing backed by Argentina's international collateral.

The discussions of a shared unit of value surfaced as part of an agreement to boost bilateral trade with more Brazilian export financing backed by Argentina's international collateral

Argentina's economy is suffering from a series of challenges, including a lack of dollars, with the government battling to replenish foreign currency reserves while also grappling with an inflation rate of nearly 100 percent last year.

Leaders from both countries are meeting at a regional summit in the Argentine capital, where Lula vowed to resume a closer relationship after former Brazilian president Jair Bolsonaro distanced himself from Argentina.

ALSO READ: Brazil and Argentina to discuss common currency

"Our finance ministers, each with his own economic team, can make us a proposal for foreign trade and transactions between the two countries that is done in a common currency," Lula told reporters alongside Fernandez.

Fernandez said that he and Lula also discussed the possibility of shipping gas from Argentina's Vaca Muerta shale formation to its neighbor.

Brazil's Finance Executive Secretary, Gabriel Galipolo, told Reuters that the currency, or "regional unit of account," would come alongside extra credit to support exports to Argentina through Brazilian banks that operate locally

Brazil's development bank BNDES may finance the building of a pipeline to deliver the gas, Lula said.

Brazil's Finance Executive Secretary, Gabriel Galipolo, told Reuters that the currency, or "regional unit of account," would come alongside extra credit to support exports to Argentina through Brazilian banks that operate locally.

Brazil's government would offer guarantees to banks that helped provide financing, while Argentina, a major grains exporter, would have to provide collateral via hard assets like grains, gas or oil.

Under the plan, the Brazilian real and Argentine peso would continue to exist, with the new tender targeted narrowly at trade.

READ MORE: Lula says intelligence services 'failed' ahead of Brasilia riots

Brazil's Finance Minister Fernando Haddad said the presidents of both countries requested the creation of a clearing house with a common currency to settle accounts.

The currency has no name or deadline and would not seek euro-style monetary unification, he added.

Share this story

CHINA DAILY
HONG KONG NEWS
OPEN
Please click in the upper right corner to open it in your browser !