Brazil and Argentina planning to establish common currency 

Brazil and Argentina are discussing the use of a common currency to promote greater economic integration between the two South American countries, Brazilian President Luiz Inacio Lula da Silva and Argentine President Alberto Fernandez said in a joint statement. 

"We intend to overcome the barriers to our exchanges, simplify and modernize the rules and encourage the use of local currencies," reads the statement published in the Argentine newspaper Perfil.

"We also decided to advance discussions on a common South American currency that can be used for both financial and commercial flows, reducing costs of operations and our external vulnerability," it continued.

South America’s two largest economies plan to announce the preparatory work to implement a common currency this week at a summit in Buenos Aires this week, the Financial Times reported. 

To strengthen ties between the two countries, da Silva visited Argentina for his first official international trip since taking office, after four years of tense relations between the Argentine government and the administration of former Brazilian President Jair Bolsonaro. 

The proposal comes as Argentina continues to battle the highest inflation it has seen in over three decades and Brazil’s economy continues to slowly grow. To implement a common currency, the two countries would need to find a middle ground between Brazil’s real and Argentina’s peso, which are currently trading at the rate of 35 pesos for 1 real. 

According to the joint statement, if implemented, the initiative could be extended to include other Latin American countries. However, Argentina’s Economy Minister, Sergio Mazza, said he didn’t want to create any “false expectations” with other countries because trade integration takes a long time.