Brazil and Argentina make plans to release a common currency
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
Brazil and Argentina are exploring plans to release a common currency. The plans are focused on improving economic integration between the two countries. The plan was confirmed by the President of Brazil, Luiz Inacio Lula da Silva and the President of Argentina, Alberto Fernandez.
Brazil and Argentina plan to release a common currency
A joint article published by the two leaders said that the goal of having a common currency was to overcome barriers and promote the use of local currencies. The countries were also in advanced talks about having a common currency in South America that would support financial and commercial growth.
The plans of having a common currency between Argentina and Brazil were first highlighted in an article published in 2022 by the current Brazil finance minister, Fernando Haddad, and his executive secretary, Gabriel Galipolo. During the campaign, the recently elected Brazilian president also mentioned similar plans.
An earlier report by the Financial Times had said that the two countries would confirm that they are working on creating a common currency. The plan for the same will be discussed at a Buenos Aires summit. It will also focus on how Brazil launching a new currency will boost regional trade in South America and support using a local currency to reduce the use of the US dollar.
The leaders from the two countries have also said that plans for a common currency started in 2019, but they faced resistance from the Brazil central bank. The project will start between the two countries before extending to other countries in Latin America. The report also noted that the move was expected during a visit of the Brazilian president to the country.
Lula plans to strengthen relations with Argentina
Since taking office, Lula has already visited Argentina, the largest trading partner of Brazil in South America. Before Lula’s election to office, the diplomatic relations between Brazil and Argentina were tense under the leadership of former president Jair Bolsonaro.
As part of strengthening economic relations, Lula has also returned Brazil to the Community of Latin American and Caribbean States (CELAC). Brazil left CELAC in 2019 at the behest of Bolsonaro. The former president refused to be part of CELAC due to the presence of Venezuela and Cuba.
The presidents of Argentina and Brazil are working on boosting regional integration. They have unveiled plans to strengthen the Mercosur trade block, which, according to Brazilian finance minister Haddad, had been abandoned. The leaders noted that the goal was to make Mercosur a platform that would support the integration of the involved countries and support balanced trade agreements that respond to strategic development objectives.
