Today, Argentina and Brazil will finally sign an agreement that abolishes the dollar as the currency of trade between the two nations. This agreement has been in the works since 2006 and was supposed to have gone into effect in July of 2007 until talks fell apart over protecting each nation’s farmers. According to Reuters, the change away from the dollar to use pesos and reals instead will reduce exchange rate costs and simplify bilateral trade. Right now, trade between the two nations equals 30 billion dollars and the trade balance had fallen heavily in Brazil’s favor. The balance of trade using the nations’ currencies will help reduce this problem and, it is hoped, keep trade between the two South American giants growing and thriving. This policy may some day expand to include all trade within Mercosur.
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