Brazil, Argentina To Eliminate US Dollar
September 10, 2008 Leave a comment
As the US dollar continues its slide against other world currencies and the banking and financial sectors weight in on the stock markets in the global economy, two of our South American neighbours have made the decision to stop using the US dollar in bilateral trade.
From Times of India
The presidents of Brazil and Argentina signed an agreement Monday to stop using the dollar in bilateral trade, but it will be up to traders to decide if they want to end use of the U.S. currency.
Brazilian President Luiz Inacio Lula da Silva and Argentina’s Cristina Fernandez hope the measure will smooth trade transactions between the two nations _ which are forecast to top US$30 billion this year.
But it is unclear how many exporters and importers will decide to do away with the dollar when the measure takes effect in early October.
Silva says it will reduce transaction costs for both exporters and importers, especially those operating on a smaller scale.
Alexandre Barros, an analyst with the Brasilia-based Early Warning political risk consultancy, says the dollar’s fall in the past year has prompted many nations to look for alternative currencies to use for trade.