Advancing global de-dollarization, China’s central bank is boosting its gold reserves while signing currency swap deals in yuan with countries like Argentina, encouraging the use of renminbi instead of US dollars.
by Ben Norton
Part 5 - Argentina and Brazil deepen economic integration, with eyes on new Latin American currency
While Buenos Aires is collaborating more closely with Beijing (its second-largest trading partner), Argentina has simultaneously pushed for stronger ties with Brazil (its largest trading partner) and economic integration of Latin America.
Brazil’s left-wing President Lula da Silva returned to power on January 1.
Two days later, Argentina’s Ambassador Daniel Scioli met with Brazil’s Economic Minister Fernando Haddad.
Scioli said his government’s top priority was “the agreement on deep Argentina-Brazil integration” that the countries’ Presidents Alberto Fernández and Lula da Silva are due to sign at the summit of the Community of Latin American and Caribbean States (CELAC) in Buenos Aires on January 24.
Brazil’s left-wing President Lula da Silva returned to power on January 1.
Two days later, Argentina’s Ambassador Daniel Scioli met with Brazil’s Economic Minister Fernando Haddad.
Scioli said his government’s top priority was “the agreement on deep Argentina-Brazil integration” that the countries’ Presidents Alberto Fernández and Lula da Silva are due to sign at the summit of the Community of Latin American and Caribbean States (CELAC) in Buenos Aires on January 24.
The Argentine ambassador likewise revealed that his government is in talks with the state-owned Brazilian Development Bank to receive financing to advance construction of a pipeline, named after former President Néstor Kirchner, which will provide a steady supply of gas to Brazil.
Argentina has the world’s second-biggest reserves of shale gas and the forth-biggest of shale oil.
Scioli added that Argentina and Brazil look to increase their exports and trade with each other, “conserving the reserves of both countries in the framework of the system of local currencies”.
Argentina has the world’s second-biggest reserves of shale gas and the forth-biggest of shale oil.
Scioli added that Argentina and Brazil look to increase their exports and trade with each other, “conserving the reserves of both countries in the framework of the system of local currencies”.
Scioli’s hint that Argentine-Brazilian trade will be done with local currencies led to international speculation that the countries are moving forward with Lula’s proposed plan to create a sovereign Latin American currency for regional trade.
This frightened some foreign investors, and was reported in the financial press with a heavy dose of concern – and condescension.
Haddad downplayed the reports, saying, “There is no proposal for one currency for Mercosur”. But his words were careful: The Brazilian economic minister said there was not yet a proposal; he didn’t deny that the potential currency was discussed.
It was likely that Haddad was merely trying to reassure foreign investors.
This frightened some foreign investors, and was reported in the financial press with a heavy dose of concern – and condescension.
Haddad downplayed the reports, saying, “There is no proposal for one currency for Mercosur”. But his words were careful: The Brazilian economic minister said there was not yet a proposal; he didn’t deny that the potential currency was discussed.
It was likely that Haddad was merely trying to reassure foreign investors.
In his inauguration speech, Lula pledged more robust social spending to fight poverty and hunger and vowed to reverse the privatizations carried out by previous far-right President Jair Bolsonaro.
These policies are overwhelmingly popular among the Brazilian people, but they scared some investors in Brazilian stocks, who sold off shares, leading to market instability and a slight drop in the value of the country’s currency, the real, against the dollar.
These policies are overwhelmingly popular among the Brazilian people, but they scared some investors in Brazilian stocks, who sold off shares, leading to market instability and a slight drop in the value of the country’s currency, the real, against the dollar.
In the mean time, Brazil’s new government, like that of Argentina, has vowed to deepen its alliance with China.
On the day after his inauguration, Lula met with China’s Vice President Wang Qishan. The statesman gave the Brazilian leader a letter from President Xi Jinping, which called to boost Chinese-Brazilian ties.
Lula tweeted, “China is our biggest trading partner, and we can even further expand the relations between our countries”.
On the day after his inauguration, Lula met with China’s Vice President Wang Qishan. The statesman gave the Brazilian leader a letter from President Xi Jinping, which called to boost Chinese-Brazilian ties.
Lula tweeted, “China is our biggest trading partner, and we can even further expand the relations between our countries”.
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