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Brazil, Argentina to eliminate US dollar

Press TV [1]
Tuesday, Sept 9, 2008

Brazil and Argentina have signed a deal that will let the two nations do away with US dollar as an intermedium in their bilateral trade.

The agreement was signed by Brazilian President Luiz Inacio Lula da Silva and his Argentine counterpart Cristina Fernandez de Kirchner on Monday in Brasilia.

The accord is viewed as an important step toward a common currency among the members of Mercosur — a South American trading bloc comprising Argentina, Brazil, Uruguay, Paraguay, and soon Venezuela.

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“We are making the first step towards future regional monetary integration. We will soon see the first results with costs being cut,” Lula told a joint media conference in the Brazilian capital.

Kirchner also hailed the deal that will allow transactions in the Argentine peso and the Brazilian real.

“It’s not only an economic issue, but also a fundamentally cultural one,” she said.

The deal, planned to come into force on October 3, will reduce the costs of intermediation and make trade easier for smaller companies of the two countries.

Argentina and Brazil’s exchanges currently account for 80 percent of the trade in the Common Market of the South, namely Mercosur, with their trade volume standing at $25 billion.

Argentina has become Brazil’s third largest trading partner, after the United States and China.