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Goodbye to US dollar in trades between Brazail and Argentina
(Xinhua)
Updated: 2008-09-09 10:10

RIO DE JANEIRO -- Brazil and Argentina agreed Monday that their bilateral trade will be settled by Brazilian reais and Argentine pesos, eliminating the US dollar as an intermedium.

Brazil's President Luiz Inacio Lula da Silva and his Argentine counterpart Cristina Kirchner signed the agreement in Brazil's capital city Brasilia.

According to Brazil's Minister of Finance Guido Mantega, the new system will reduce the costs of intermediation, making trade easier for smaller companies of the two countries.

Mantega said the agreement represents the first step toward a common currency for Mercosur (Common Market of the South), which gathers Brazil, Argentina, Paraguay and Uruguay.

He added that the trade volume between Brazil and Argentina has reached 25 billion US dollars annually, and Argentina has become Brazil's third largest trading partner, after the United States and China.

Statistics show that some 19 percent of Argentina's exportation heads to Brazil, and 32 percent of Brazil's exportation goes to Argentina.

The agreement, which takes effect on October 6, aims to reduce the obstacles in commercial transactions between the two countries and encourage small and medium-sized companies to join international trade.

With the elimination of the US dollar from the two nations' bilateral trade, exporters will no longer be exposed to the variation of the exchange rates, and will receive exactly the amount of money they negotiated.

The exchange rate between reais and pesos will be calculated through the rates of reais-dollar and pesos-dollar, and will be published by the Brazilian and Argentine central banks daily.