| COSTA DO SAUIPE, Brazil, March 28
COSTA DO SAUIPE, Brazil, March 28 Brazil and
Argentina signed a deal on Friday that seeks to guarantee
importers will have enough U.S. dollars to pay for exports, a
move to increase trade between both nations that has been hit
hard by a sharp depreciation of the Argentinian peso.
A scarcity of greenbacks in Argentina has curbed Brazilian
exports of manufactured goods like cars and home appliances,
reducing the country's trade surplus to its lowest in over a
decade last year.
"This is the first step to unlock trade between both
countries," Brazilian Trade Minister Mauro Borges said after a
meeting with Argentinian officials in the sidelines of the
Inter-American Development Bank annual meeting.
"We will guarantee the liquidity of trade operations between
The deal highlights the urgency Brazilian authorities have
to prop up a weakening trade balance and help a local industry
that has suffered from years of exchange volatility, high taxes
and burdensome red tape.
In the memorandum of understanding, both countries agree to
consider adopting financial instruments to lower the currency
exchange risk for importers in loans of at least 90 days.
One option is for the countries to issue local-currency
denominated debt protected against foreign exchange
fluctuations, a sort of a exchange hedge for importers that need
dollars to pay for the products.
The sharp depreciation of the Argentinian peso,
which has slid nearly 19 percent against the U.S. dollar so far
this year, has reduced the supply of dollars for importers.
The country's reserves have plunged to $27.5 billion from a
high of $52.7 billion in 2011, according to rating agency
Moody's, which cut the country's rating further into junk
earlier in March.
Argentina has been cut off from international capital
markets since its 2002 sovereign bond default, while other
potential investment has been chased away by high inflation.
In the agreement, both countries also pledged to reduce red
tape at customs to ease the flow of goods.
(Reporting by Alonso Soto; Editing by Bernard Orr)