The agreement was reached within the framework of the LXII Meeting of Ministers of Economy and Presidents of Central Banks of Mercosur. The meeting took place in Puerto Iguazú, province of Misiones (Argentina). It seeks to rely on the idea that the reduction of transaction costs to trade in local currencies.
Argentina and Uruguay have signed a letter of intent aimed at promoting the development of low-cost financial instruments for operations involving the Uruguayan peso and the Argentine peso. The event was attended by the president of the Central Bank of Uruguay (BCU), Diego Labat, and the president of the Central Bank of the Argentine Republic (BCRA), Miguel Pesce.
The agreement was reached within the framework of the LXII Meeting of Ministers of Economy and Presidents of Central Banks of Mercosur. The meeting took place in Puerto Iguazú, province of Misiones (Argentina).
Details of the Agreement between Uruguay and Argentina
According to official information, the primary objective of the agreement is to incorporate payments related to trade in services (except payments related to financial services), transfers for family support, as well as to allow the transfer of resources to be denominated indistinctly in pesos. Argentine or Uruguayan pesos.
Few data are known from what was confirmed by the officials representing both countries. What is known is that the technical and operational aspects and the requirements for the use of these new options will be stipulated through agreements between both institutions.
The commitment establishes that the central banks of both countries work to expand the operations admitted in the Local Currency Payment System in force between Uruguay and Argentina.
This agreement seeks to rely on the idea that the reduction of transaction costs to trade in local currencies, through the Local Currency Payment System, represents a stimulus for foreign trade operations.
The Local Currency Payment System allows economic agents in Uruguay and Argentina to become familiar with the use of the other country’s currencies. In addition, it promotes progress in the economic integration process. Finally, it aims to strengthen the links between the institutions, increasing the liquidity and efficiency of the exchange market between the Argentine peso and the Uruguayan peso.
The Local Currency Payment System in force between both countries allows payments for goods trade operations documented in the currency of the exporting country. Likewise, transfers classified as retirement and pensions are admitted, when there is a bilateral agreement signed between the pension institutes of both countries.
Dollar and Inflation in Uruguay and Argentina
In regards to the parity to the dollar, the differences are notable between Uruguay and Argentina. In the first case, for every dollar it is necessary to have 37.52 Uruguayan pesos.
On the other hand, in Argentina there are multiple prices (the one with the highest reference is the blue, which reaches 492 Argentine pesos). In addition, there is a stock that does not allow the purchase, and a cultural obsession with the dollar.
Regarding inflation, the year-on-year data in Uruguay stood at 5.98% last June, remaining within the target range established by the Government led by Luis Lacalle Pou, which goes from 3% to 6%.
The problem in Argentina is much more acute, as the most recent year-on-year data on inflation positions it in 114%. In fact, the Central Bank consultants placed it in almost certain three digits by the end of this year.
By Marina Meza
