(Bloomberg) -- Argentina is accelerating permits for food imports from Brazil after companies said they would conduct trade in local currencies instead of U.S. dollars, said Diego Perez Santisteban, head of the Chamber of Importers.
“One of the government’s goals was to reduce the outflow of U.S. dollars,” Santisteban said in a telephone interview from Buenos Aires. “The use of local currencies also makes trade costs cheaper for companies from both countries.”
Brazil and Argentina began to encourage use of the peso and the real for trade last year in a bid to cut the two nations’ dependence on dollars for commerce. The system was used for about $1 billion worth of the transactions so far, or less than 3 percent of total trade, Santisteban said.
Importers last month said it was harder to bring goods into Argentina after the government said it would examine purchases abroad to study the “competitiveness” of the national market. The possibility of restrictions prompted threats of retaliation against Argentina from Brazil and the European Union, the country’s biggest trade partners.
The bid to use local currencies may slow the flight of dollars from the country, which has been blocked from tapping international credit markets since 2001, when it defaulted on $95 billion in debt. Argentine President Cristina Fernandez de Kirchner’s government is tapping about $4.4 billion of the country’s $49 billion in reserves to help pay debt due this year.
Accumulating Reserves
“With Argentina blocked from accessing international markets, the government needs dollars to accumulate reserves,” said Mauricio Claveri, an economist at Buenos Aires-based research company Abeceb.com.
The press office for Interior Commerce Secretary Guillermo Moreno didn’t respond to messages left by Bloomberg News.
Import restrictions and an exchange rate policy that favored local industry enabled Argentina to build up a record trade surplus of $17 billion in 2009, President Cristina Fernandez de Kirchner said in an April 15 interview.
Argentina had a $332 million trade deficit with Brazil in May as imports rose 74 percent from a year earlier, the fastest pace in five months, according to Abeceb.com. The overall trade surplus rose to $1.9 billion in April, led by soybean sales, after falling to $311 million in March, the national statistics institute reported.
Santisteban forecasts the trade surplus surpassed $1.6 billion in May, the second biggest since May last year, as global trade recovered. The national statistics institute will release May figures on June 22.
To contact the reporter on this story: Eliana Raszewski in Buenos Aires at
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