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Argentina, Brazil to drop U.S. dollar in bilateral commercial transactions
Xinhua ^ | 16 Mar 2008 | Xinhua

Posted on 03/17/2008 3:47:03 AM PDT by BGHater

Argentina and Brazil are to scrap bilateral commercial transactions in U.S. dollars and start using their own currencies from August, an official in charge of currency settlement at the Argentine Central Bank said here Saturday.

The new payment system is aimed at reducing costs in commercial transactions and would benefit small and medium-sized enterprises, the official said.

Under the new system, there will be a unified exchange rate between the real and peso, the so-called reference rate, which will be applied by Brazilian and Argentine central banks at the end of each day.

Brazilian President Luiz Inacio Lula da Silva reached an agreement to establish a new payment system with his Argentine counterpart Cristina Fernandez de Kirchner during his visit to Argentina in February.

Technical preparations are underway for the new system, which the two countries will adopt in several steps due to the large amount of bilateral trade.

Brazil is Argentina's largest trading partner, while Argentina is Brazil's second-biggest trading partner after the United States.

Bilateral trade stood at around 23.6 billion U.S. dollars last year


TOPICS: Business/Economy; Foreign Affairs
KEYWORDS: argentina; brazil; dollar; transactions
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To: BlazingArizona
What counted most in 1923 was your ability to keep your job. What made jobs desirable were products to sell that everyone wanted: basic foodstuffs, coal, and liquor.

Inflation is only good for debtors if they have steady sources of income, as saved commodity assests usually won't last more than a couple of years. High inflation tends to cut back on many jobs previously thought to be essential, particularly service and government jobs.

21 posted on 03/17/2008 10:05:10 AM PDT by VanShuyten ("Ah! but it was something to have at least a choice of nightmares.")
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To: djf

Nay, not so. The interest I pay is my cost for immediate use of the money or what it buys. If I can make payments I could save the money and buy later but an interest bearing loan allows me to buy now. For the lender the interest rec’d is his payment for deferring his use of the money he loans me. Each of us has made a decision we think is beneficial to ourselves. One of us might be wrong but that’s what “look before you leap” and other such cliche’s mean. Do you understand?


22 posted on 03/17/2008 10:38:25 AM PDT by count-your-change (you don't have to be brilliant, not being stupid is enough.)
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To: BGHater

Can someone tell exactly what this means?


23 posted on 03/17/2008 5:27:16 PM PDT by redgolum ("God is dead" -- Nietzsche. "Nietzsche is dead" -- God.)
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To: redgolum
In simple terms, more and more countries are viewing the greenback as a less influential, or safe currency.
24 posted on 03/17/2008 5:31:13 PM PDT by BGHater ($2300 is the limit of your Free Speech.)
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To: BGHater

who can blame them? I know a lot of folks believe government cpi numbers and find it hard to believe such a political and monetarily important (cola raises) number would ever be subject to political consideration in its production, but maybe with the dollar down 15% plus across the board the last year, folks will notice prices rising faster than they are being told.


25 posted on 03/17/2008 10:28:16 PM PDT by WoofDog123
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To: DB

“Paying back debt with devalued dollars isn’t such a bad thing as long as you can come up with them. ‘

From a government’s viewpoint, this is completely right.

From a taxsheep’s viewpoint whose life savings are in dollars, the sheep is getting badly screwed.


26 posted on 03/17/2008 10:29:18 PM PDT by WoofDog123
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To: Moonman62

“Who says the dollar is con longer a reserve currency. Not only is it still a reserve currency, but it’s a de facto currency in many places.”

It is certainly less of a reserve currency among currency-reserve-holding nations as a whole.

Seeing it fall 15% plus in such a short time, and the monstrous debt-monetization the fed is engaged in now, is something dollar holders are doubtless looking at.

In fact, the move down the last year or so in part must be reserves being moved out of dollars. Supply and demand applies here.


27 posted on 03/17/2008 10:31:42 PM PDT by WoofDog123
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To: WoofDog123

Correct.

My point being in periods of high inflation, debt is better than holding cash.

You pay back debt with inflated dollars that are worth less.

The other way your hard earned cash loses value each day during periods of high inflation.


28 posted on 03/17/2008 10:43:18 PM PDT by DB
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To: WoofDog123
It is certainly less of a reserve currency among currency-reserve-holding nations as a whole.

Probably not by very much.

Seeing it fall 15% plus in such a short time, and the monstrous debt-monetization the fed is engaged in now, is something dollar holders are doubtless looking at.

The dollar's been falling for years, ever since W said a strong dollar is good for America and he supports a strong dollar. Even when the Fed was raising interest rates the dollar was falling. A big part of that is the ECB has consistently held their rates too high, a lot like what we did in the late 1990's.

Right now the Fed is fighting a big liquidity problem. Debt monetization is the wrong way to describe it.

In fact, the move down the last year or so in part must be reserves being moved out of dollars. Supply and demand applies here.

The move down is mainly from the disparity in interest rates between us and the EU. Part of it is momentum, and traders know that W loves the weak dollar (in spite of what fibs he tells), and they know he's unlikely to intervene.

29 posted on 03/18/2008 3:40:27 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Moonman62

Several countries have dropped the us of US dollars as the exchange medium between them (as the case of this article), countries we send aid to are requesting that aid in Euros, and I would not be surprised to see oil to begin being traded in Euros in the fairly near future... stability is the name of the game when looking for a currency to be a “reserve” currency. For many years, the US dollar has been relatively steady with only moderate change in value. But the last couple of years has shown a major shift with the last several months showing a MAJOR drop in value.


30 posted on 03/18/2008 8:15:18 AM PDT by TheBattman (LORD God, please give us a Christian Patriot with a backbone for President in 08, Amen.)
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To: TheBattman
For many years, the US dollar has been relatively steady with only moderate change in value.

Not true. The dollar went through a huge drop in value when the Bretton Woods system collapsed in the early 1970's, and since then it has been all over the place, yet it's remained a reserve and de facto currency all over the world.

But the last couple of years has shown a major shift with the last several months showing a MAJOR drop in value.

The dollar is at a level it was last at in 1995.

31 posted on 03/18/2008 8:27:52 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Moonman62
The dollar is at a level it was last at in 1995

You mean when 1 US$ would buy 1.45 Canadian dollars? Today, $1 will only buy .99 $ Canadian.

32 posted on 03/18/2008 8:48:56 AM PDT by TheBattman (LORD God, please give us a Christian Patriot with a backbone for President in 08, Amen.)
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To: TheBattman

Dollar to yen which is a valid comparison since Japan was the second largest economy and would still be if EU countries are treated individually.


33 posted on 03/18/2008 8:51:31 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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