Brazil and Argentina aim for a significant economic integration to examine the common currency

January 24, 2023: Brazil and Argentina aim for more significant economic integration, including developing a common currency, Brazilian President Luiz Inaction Lula da Silva and Argentine leader Alberto Fernandez stated in a joint article they penned.

“We intend to defeat the barriers to our exchanges, simplify and modernize the rules and boost the use of local currencies,” the text published on the Argentine website Perfil stated.

“We decide to advance talks on common South American finance that can be used for financial and commercial flows, decreasing costs operations and our external vulnerability,” the article said.

The idea of a currency to be common was raised initially in an article written in the previous year by Fernando Haddad and Gabriel Galipolo, now Brazil’s finance minister and executive secretary, respectively. Lula mentioned it during the campaign.

Lula picked Argentina for his inaugural international trip since taking office, which keeps with the tradition of initially visiting Brazil’s largest trading partner in the region. That is following four years of tense relations during the administration of former Brazilian right-wing President Jair Bolsonaro.

Lula’s trip to neighbouring Argentina marks the comeback of Brazil to the group of Latin American and Caribbean States, which Brazil is leaving in 2019 under orders from Bolsonaro, declining to take part in the regional group due to the presence of Cuba and Venezuela.

According to the article, both presidents emphasized the need for a good relationship amid Argentina and Brazil to strengthen regional integration.

The leaders emphasize strengthening the Mercosur trade bloc, including Argentina, Brazil, Paraguay and Uruguay, which Brazilian Finance Minister Haddad lamented has been abandoned in recent years.

“Together with our partners, we are willing Mercosur to constitute a platform for the effective integration into the world from the joint negotiation of balanced trade deals that respond to our strategic development objectives,” both presidents stated.

The Financial Times reported that the neighbouring nations would announce they are beginning preparatory work on a common currency this week.

The plan will be discussed at a summit in Buenos Aires and will focus on how a new currency Brazil suggests calling the south could boost regional trade and decrease reliance on the U.S. dollar, FT reported quoting officials.