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Regional currency to replace dollar in Argentina-Brazil trade

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  • Regional currency to replace dollar in Argentina-Brazil trade

    BUENOS AIRES, May 23 (RIA Novosti) - Argentina and Brazil, South America's two largest economies, will drop the U.S. dollar in favor of a regional currency in their bilateral trade starting in October 2007, Argentine Economics Minister Felisa Miceli said.

    The countries' transition to a new currency, as yet unnamed, is part of a pilot project by the South American continent's major trade alliance, Mercosur, to replace the U.S. currency in internal transactions with money of its own, Miceli said.

    Speaking ahead of a Mercosur ministerial session in Paraguay, she said the new currency should eventually spread throughout the bloc, which also includes Paraguay, Uruguay, and Venezuela.

    Bolivia, Chile, Colombia, Ecuador and Peru have associate member status.
    Argentine-Brazilian commerce topped $20 billion in 2006, with Argentina running a deficit of $4 billion.
    Since its foundation in 1991, Mercosur's primary objective has been to remove obstacles to internal trade. But the recent admission of Venezuela made experts wonder whether the country's anti-American leader, Hugo Chavez, would try to turn Mercosur into a political weapon to undermine U.S. influence in the region.

    http://en.rian.ru/world/20070523/65966459.html


    This is exactly what Russia and China did about six months after the US/brits illegally invaded Iraq was drop the use of the d0llar from their cross border trades. Right after that Russia and China signed a treaty regarding their border dispute and agreed to hold joint military exercises the following year, which they have done every year since then. Trade at the time between the two countries was very small, today while still not a huge number cross border trade has been growing exponentially and once the oil pipeline to China is completed later this year trade between the two countries will skyrocket.

    Looks like South America is doing their part towards the creation of a Multi-Polar world and this is a huge step in that direction. I think the Bank of the South is set to open this summer. South America has a population greater than the Eurozone and soon they'll have an economy that rivals the Eurozone as well.

    There are many other countries interested in joining Mercosur, with Mexico and most of Central America interested as well.

    Now the question to be asking is where will the 20 billion D0llars that used to be used for cross border trade eventually go? US Stocks? Bonds? or Real Estate? D0llar Repatriation is really going to start kicking in. If South America isn't holding onto d0llars does this create a stronger d0llar or a weaker d0llar? I'd bet that answer would suprise most of you.
    "Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."
    - Charles Mackay

  • #2
    Re: Regional currency to replace dollar in Argentina-Brazil trade

    Originally posted by Tet View Post
    Now the question to be asking is where will the 20 billion D0llars that used to be used for cross border trade eventually go? US Stocks? Bonds? or Real Estate? D0llar Repatriation is really going to start kicking in. If South America isn't holding onto d0llars does this create a stronger d0llar or a weaker d0llar? I'd bet that answer would suprise most of you.
    Tet,

    Assuming you know the answer, then post it.
    Jim 69 y/o

    "...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)

    Dedicated to the idea that all people deserve a chance for a healthy productive life. B&M Gates Fdn.

    Good judgement comes from experience; experience comes from bad judgement. Unknown.

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    • #3
      Re: Regional currency to replace dollar in Argentina-Brazil trade

      Originally posted by Jim Nickerson View Post
      Tet,

      Assuming you know the answer, then post it.

      So we have an amerio ( euro) and an amerio zone, so what ? Taint nothing stoping the green backs slide down the ole crapper
      I one day will run with the big dogs in the world currency markets, and stick it to the man

      Comment


      • #4
        Re: Regional currency to replace dollar in Argentina-Brazil trade

        Originally posted by Jim Nickerson View Post
        Tet,

        Assuming you know the answer, then post it.
        As to where the d0llars go when they are being repatriated there are only three places, US stocks, US bonds and US real estate. As to which of the three they flow to I certainly couldn't say other than they seem to be flowing into stocks at the moment.

        As to the d0llars strength or lack there of, d0llar will get stronger because of this, less d0llars are being created. D0llar should weaken short term because Argentina and Brazil were supposed to make this announcement for this summer not October. Come October we have a stronger d0llar.
        "Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."
        - Charles Mackay

        Comment


        • #5
          Re: Regional currency to replace dollar in Argentina-Brazil trade

          Originally posted by Tet View Post
          As to where the d0llars go when they are being repatriated there are only three places, US stocks, US bonds and US real estate. As to which of the three they flow to I certainly couldn't say other than they seem to be flowing into stocks at the moment.

          As to the d0llars strength or lack there of, d0llar will get stronger because of this, less d0llars are being created. D0llar should weaken short term because Argentina and Brazil were supposed to make this announcement for this summer not October. Come October we have a stronger d0llar.
          Thank you, Tet, for sharing your insight.
          Jim 69 y/o

          "...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)

          Dedicated to the idea that all people deserve a chance for a healthy productive life. B&M Gates Fdn.

          Good judgement comes from experience; experience comes from bad judgement. Unknown.

          Comment

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