The bilateral agreements that countries like Argentina are negotiating by virtue of carrying out commercial transactions with alternative currencies to the dollar seek to reduce dependence on the US currency in a context of financial tensions that derive from global changes, economic analysts of the South American country opined.
Economists linked to the academic field valued that Argentina and Brazil are looking to use their own national currencies and analyzed similar initiatives in other regions of the world that consider alternatives to the US currency.
For the researcher Pablo Menéndez Portela, professor of macroeconomics at the National University of Lanús, the eventual agreement between the two main economies of the Southern Common Market (Mercosur) “will represent a boost to bilateral trade”, in addition to reducing dependence on the dollar, which has historically represented an “obstacle” to the growth of emerging economies.
“The possibility of establishing bilateral trade without the use of the dollar or a foreign currency, or foreign currency to both countries, goes in the direction of promoting this bilateral trade and continuing to deepen economic relations,” said the analyst in dialogue with Xinhua.
«The hegemony of the dollar represents for developing countries an obstacle to their growth. This happens because, since the dollar is the dominant currency in international trade, it naturally implies a need to obtain this currency to be able to carry out trade and also a dependence on the policies of the US Federal Reserve (Fed, central bank), “said Menéndez. .
For the also economics and market researcher at the Centro de Estudios Atenea, this type of initiative constitutes an alternative in a context of financial fragility that Argentina is going through, with a high level of indebtedness and insufficient availability of foreign currency, to which unites the need to preserve international reserves.
“The lack of dollars that some countries may eventually suffer or the dependence that the use of the dollar as a trade currency generates with respect to the United States plays an important role. In this sense, of course, these initiatives, these agreements, imply deepening trade ties between developing countries and an attempt to reduce the dependence that the dollar generates with the US,” Menéndez emphasized.
The analyst highlighted the particular context of the rise in interest rates by the Fed, which seeks to lower inflation levels at the expense of developing economies, adding further pressure to these if they also have difficulties in their respective balance of payments. and face significant levels of indebtedness.
When the US raises its interest rate, Menéndez reasoned, developing countries experience capital flight. To this is added the “increase in financing to be able to obtain their imports that are so necessary. And that results in an additional difficulty to be able to place their own products in the international market », he added.
The economist Javier Adelfang also blamed the shortage of dollars facing Argentina as one of the reasons that makes initiatives like the one being carried out with Brazil a “breath of fresh air” as long as they reduce dependence on the US currency.
“It is a breath of fresh air, both for the Central Bank reserves and for the productive sector, which requires imported inputs. On the other hand, the agreement is important for Brazil, as it will allow trade with Argentina to continue,” Adelfang told Xinhua.
Beyond an analysis from the point of view of bilateral trade, the expert offered a political reading on the current model for the global exchange of goods.
“When we enter our house and look around, we realize that most of the products that surround us are not made in the United States, however, we use its currency to buy and sell. So, from common sense, it is valid to ask if it is really necessary to use that currency for exchanges”, pointed out the professor at the International University of the Americas (Costa Rica).
Other express desires, such as that of Saudi Arabia to accept payments in yuan (the Chinese currency) for its shipments of crude, reflect that the intention to minimize dependence on the US currency has an international dimension, Menéndez commented.
“There are several initiatives currently being carried out in terms of international trade without the use of the dollar,” he said.
He also referred to the creation of the New Development Bank (NDB) of the BRICS group, made up of Brazil, Russia, India, China, and South Africa, which contemplates issuing financing in the local currencies of the member countries.
«It seems to me a good experience, yet to see what level of depth it will reach, the BRICS in terms of organization have been having a greater boost in recent months and, in this sense, the creation of the NDB as a development bank of the five countries as a whole, each with their respective currencies, gives it interesting potential,” Menéndez stressed.
He added that “the size of the economies that make up the BRICS group implies that, through this bank, projects can be developed beyond the borders of the BRICS, in other developing countries and boosting trade with other countries, already proposing either its own currency or a basket of currencies”.
For his part, Adelfang mentioned the exploration being carried out by India and Sri Lanka to trade in rupees, all of which “would allow Sri Lanka to take pressure off its post-crisis recovery process.”
“The agreement between the members of the Shanghai Cooperation Organization to increase the use of their currencies in trade between them is also very interesting,” the economist remarked.
With regard to Argentina, the recent agreement reached with China for the payment in yuan of imports of goods originating in the Asian country is striking for both experts, which they described as “positive” given the situation of economic fragility and high indebtedness that the South American country is going through and that deepens even more with the outflow of capital.
For Adelfang, there is a “multiplicity of factors” that affect the promotion and development of initiatives that aim at “de-dollarization.”
«From something as simple as the fact that there is no theoretical justification for having to negotiate in dollars and not in another currency to deeper issues such as the need for emerging countries to break with the rigidity of the monetary system established at Bretton Woods» , he pointed.
“In addition, the enormous public debt of the US as well as the decrease in its participation in international trade, the (financial) crisis of 2008 and the continuous monetary issue to solve its deficits have been diminishing confidence in that currency as a currency reserve”, emphasized the expert.
For both economists, the changes in the international system at the geopolitical level are also opening the way for alternatives in the global financial and monetary sphere.
“They are changing the unipolarity, represented in the dollar, into a multipolarity that could well be represented by a basket of currencies,” concluded Adelfang.