A delegation from South Africa’s State-owned Development Bank of Southern Africa has arrived in Brasília to hold talks with the Brazilian National Bank for Social and Economic Development about the possibility of financing trade between the two countries using their respective local currencies, the rand and real, instead of the dollar or euro.
“Basically, the idea is to facilitate trade,” explained Brazilian Ministry of Development, Industry and Foreign Trade international advisor Peter Stossel to Engineering News Online in Johannesburg on Monday. “We have both suffered from the devaluation of the dollar and the strengthening of our currencies. The real has become too expensive.”
Some of Brazil’s trade with its neighbours in South America is already conducted using local currencies and not the dollar, and the Brazilian government wants to expand this system.
“These talks [with South Africa] are initial talks,” he reported. “The dollar doesn’t work any more as an international currency, and the euro even less! The dollar doesn’t meet the needs of twenty-first century trade. What works is cooperation and partnership. Trade is only good if it is good for both of us.”
“I think we cannot be tied, in our trade, with one specific currency,” agreed Rio de Janeiro-based Brazil-South Africa Chamber of Commerce head Paulo Protasio. “Especially in a world that is in such trouble. Suddenly you have currency volatility , which is not conducive to our [trade] relations. The idea is to use the two development banks to enable trade in our local currencies.”
Both Stossel and Protasio are leading members of a Brazilian trade mission to Angola, Mozambique and South Africa, organised by Brazilian Agency for the Promotion of Exports and Investment (better known as ApexBrasil), which falls under the Ministry of Development, Industry and Foreign Trade. The mission’s South African leg opened at the Sandton Convention Centre on Monday morning.
Currently, South Africa is running a trade deficit with Brazil. During the first nine months of this year, this country’s exports to Brazil were worth $700.67-million while imports from the South American country came to $1.23-billion.