Argentina and Brazil Rumoured to Consider Creation of Joint Currency 'Peso Real' - Reports

Brazil’s President Jair Bolsonaro and Finance Minister Paulo Guedes held a meeting with Argentinian and Brazilian businessmen in Buenos Aires on 6 June.

Buenos Aires and Brasilia are considering the creation of a common currency called the "peso real", a combination of Argentina's peso and Brazil's real, Globo reported, citing business sources. Because the two countries are politically aligned, there is a tendency to adjust their macroeconomic policies and create a common currency. This has reportedly already been proposed by previous governments.

According to Congressman Eduardo Bolsonaro, as cited by Globo, the plan to create a "peso real" is an idea that shouldn't be undertaken in the short term.

READ MORE: Argentina Curbs Primary Fiscal Deficit in Line With IMF Assistance Program

However, the Brazilian Central Bank has denied that there is a proposal to create a common currency. The bank said in a statement that there are "no projects or studies underway for a monetary union with Argentina". Argentinian officials haven't commented on the matter.

Argentina is considered to be Brazil's third largest trade partner, after the US and China. 

In 2018, Argentina faced an economic disaster, with the peso dropping and inflation soaring, prompting the country's government to seek an IMF loan. In October, the IMF increased Argentina's stand-by financing deal to $56.3 billion after the country agreed to stricter fiscal measures, including steep spending cuts and higher taxes.