Tuesday 07 October 2008, San José, Costa
Rica
US Crisis Affects
Central America
Guatemala Municipality
under Prevention
Venezuela Asks PARLATINO
for Extradition
Peru Braces for
New Protests
Brazil, Argentina Start
Bilateral Transaction
With Local Currencies
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Brazil, Argentina Start
Bilateral Transaction
With Local Currencies
BRASILIA - Brazil and
Argentina, two biggest
economies in South
America, Monday launched
a new payment system of
bilateral transaction
with their local
currencies, aimed at
eliminating the U.S.
dollar as an intermedium.
The new system was
agreed by presidents of
the two countries early
last month to end
decades of mandated
trade in dollars.
Argentine Central Bank
President Martin Redrado
and Brazilian Central
Bank President Henrique
de Campos Meirelles
signed the enforcement
of the agreement, the
Payment System on Local
Currency(SML), last
Thursday.
Under the system,
exporters and importers
from both countries will
make their exchanges
with Brazilian reais and
Argentine pesos.
The trade on reais and
pesos will mainly
benefit the small and
medium companies from
both countries because
it will avoid the
payment of bank charges
when averting to
dollars.
According to the Central
Bank of Argentina, the
trade between Brazil and
Argentina is about 25
billion U.S. dollars per
year.
Brazilian authorities
said that with the SML
exporters will receive
exactly the negotiated
value on their currency.
Although this new system
seeks to gradually
eliminate the dollar
from the bilateral
trade, the dollar will
continue at the
exchange.
The central banks of
Brazil and Argentina
will set the exchange
rate between the reais
and pesos with respect
to the dollar.
Brazilian authorities
said that the SML
deepens the integration
between Brazil and
Argentina.
If the mechanism works
out without incidents
between Brazil and
Argentina, it will be
adopted by other
countries of the
Mercosur, like Paraguay
and Uruguay, Brazilian
authorities said.
Brazilian and Argentine
authorities said that
the partial elimination
of the dollar in their
bilateral trade does not
have to do with the U.S.
financial crisis since
the SML was arranged a
long time ago.
Economist Mariano
Lamothe from the
economic website
www.abeceb.com said that
despite the financial
crisis in the United
States, the dollar is
more stable than the
peso or reais.
The new payment system
has more political
importance than
technical importance
because it will strength
ties between Argentina
and Brazil, the biggest
economies of the
Mercosur, Lamothe said.
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