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Petróleo Brasileiro S.A. - Petrobras Message Board

  • winsabokk winsabokk Nov 27, 2008 7:00 PM Flag

    Argentina and Brazil Abolish Dollar in Bilateral Trade

    More and more commerce will be moving away from the dollar. Just at a time when more and more dollars will be printed. Hmmm, means NOTHIN!

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    • < More and more commerce will be moving away from the dollar. Just at a time when more and more dollars will be printed. Hmmm, means NOTHIN!>

      Seeing as how Argentina has basically fixed its currency in the 3 to 3.3 pesos to the dollar range, it means nothing to the dollar.

      And Argentina is an unqualified mess right now. Food is Argentina's primary export, and food producers are hamstrung by price controls in the domestic market, falling commodity prices, and an appreciating currency which makes comparable Brazilian goods that much cheaper.

      I give it one year max. before Brazilians start demanding that they be paid in dollars as opposed to Argentine pesos.

      I didn't answer Fred's question about Brazil and the U.s. and which country had better managed its economy. That is like asking who is a better baseball player: Barry Bonds or Micheal Jordan. Bush has been the worst economic leader the U.S. has had since Hoover while Lula has been the best Brazil has ever had.

      That stated, Argentina's economy has been bungled even worse than ours.

    • Was not aware of this -- despite living in Brazil... so thanks.

      Interesting indeed, but maybe not so bad for the dollar:

      [Both sides said that bilateral trade would save forex costs, especially for smaller businesses.] Very positive, though not necessarily for the dollar.

      [Brazil sees the move as a first step towards more monetary cooperation in the Mercosur area that other countries could join as well."We’re giving a crucial step for a future regional monetary integration” said Lula da Silva during the official reception. "We are going to abolish the dollar as a currency in our trade" he added.]

      This is the key to it all... future regional monetary integration. I am not an international economist, but I believe that consensus among them is that monetary Integration in Europe (the creation of the Euro) was a net positive development. Monetary integration in LatAm would probably be net positive, too.

      [Lula da Silva pointed out that he wanted Brazil and Argentina's trade balance to be more balanced. Argentina had a 2.7 billion US dollars trade deficit with its larger neighbor Brazil in the first half of the year.]

      Argentines would never admit it but, economically, they are are a province of Brazil.

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