SÃO PAULO—Brazil and Argentina have started preliminary talks to create a common currency, as their leftist leaders revive a proposal that economists and central bankers have long criticized.
Brazil’s President
Luiz Inácio Lula da Silva
wants to boost trade with Argentina, his country’s third-largest trading partner, while improving economic cooperation, he said in a joint op-ed with his Argentine counterpart.
“We decided to advance discussions on a common South American currency that can be used for both financial and commercial flows, reducing operational costs and our external vulnerability,” Mr. da Silva and Argentine President
Alberto Fernández
wrote in the op-ed, which appeared in Argentina’s Perfil newspaper on Saturday, ahead of the Brazilian leader‘s arrival in Buenos Aires on Sunday.
The leaders emphasized the importance of maintaining each country’s currencies, implying that any new currency would operate in parallel to the Brazilian real and Argentine peso. “We intend to overcome the barriers to our exchanges, simplify and modernize the rules and encourage the use of local currencies,” they wrote.
Mr. da Silva said their objective was to reduce the region’s reliance on the U.S. dollar, which is commonly used in bilateral trade in Latin America.
“If it were up to me, we would always trade in the currency of the other country so we wouldn’t have to depend on the dollar,” Mr. da Silva told reporters Monday.
Mr. Fernández’s office didn’t respond to requests for further comment.
A sit-in was held in Buenos Aires in September to protest Argentina’s agreement with the IMF.
Photo:
AGUSTIN MARCARIAN/REUTERS
Mr. da Silva’s openness to coordinating currencies sparked criticism from business leaders and opposition politicians in Brazil who said they saw the move as an ominous start to his economic policy three weeks into his presidency.
The 77-year-old former trade-union leader,…
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