June 7, 2019 / 1:35 PM / 2 months ago

Brazil central bank denies plans for Argentina monetary union

BRASILIA, June 7 (Reuters) - Brazil’s central bank has denied any planning is underway to create a monetary union with Argentina, after a spokesman for the government in Buenos Aires said on Thursday it was the case.

“The central bank of Brazil does not have any plans or studies in progress for a monetary union with Argentina,” it said in a statement late on Thursday night.

“As is natural in a relationship between partners, there is dialogue on macroeconomic stability as well as discussions about reducing risk and vulnerability, and the strengthening of our institutions.”

A spokesperson for Argentina’s Ministry of Finance said on Thursday that the two governments are negotiating the creation of a joint currency that could be called the “real peso,” combining the names of Argentina’s peso and Brazil’s real.

“We are working on that in the medium to long term,” the spokesperson told Reuters, during a visit to Buenos Aires by Brazilian President Jair Bolsonaro and Economy Minister Paulo Guedes.

According to Brazilian newspaper O Globo, Bolsonaro and Guedes told Argentinian and Brazilian business leaders at a meeting in Buenos Aires that they would like to explore the idea.

The general reaction back home was skeptical.

“Really? You’re going to devalue the real? The dollar worth R$6.00? Inflation coming back? I hope not,” tweeted Rodrigo Maia, president of Brazil’s lower house of Congress, on Friday.

$1 = 3.86 reais Reporting by Jamie McGeever Editing by Susan Thomas

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