RIO DE JANEIRO, Oct. 14 (Xinhua) -- Brazilian President Luiz Inacio Lula da Silva Tuesday defended the abolishment of the U.S. dollar as the settlement currency in Brazil-Argentina trade.
"Why cannot we make a direct conversion of our own currencies?" Lula asked.
Brazil and Argentina recently launched a new payment system in their bilateral trade which no longer requires the dollar as the medium of exchange.
The new measure, as Argentine President Cristina Fernandez de Kirchner put it, will eliminate bank fees associated with converting local currencies to dollars and boost profit margins for companies in South America's two largest economies, especially for small and medium businesses.
Lula said Brazil will start discussing the use of local currencies in trade first with other countries in the Common Market of the South and then the rest of South America.
On the sharp turbulence of the dollar at the world foreign exchange markets, the Brazilian leader said the dollar "will find its balance when the (world) economy finds its equilibrium."
"That is the advantage of a floating exchange rate," he said.
He said Brazil's export in 2008 is expected to reach its original target of 200 billion dollars despite the world financial crisis, noting that the recent increase in imports should not be seen as a problem.
"We are importing machinery. That means we are importing in order to produce more (for exporting)," he said.
Brazil's trade surplus dropped in the last few months. The World Trade Organization has predicted that it would be difficult for Brazil to maintain a trade surplus if prices for commodities continue to decline.
