Friday, November 23rd 2012 - 21:15 UTC

Brazil steering its currency to competitive ground for manufacturing

Brazil's exchange rate is at a reasonable level though not totally satisfactory said Finance Minister Guido Mantega on Friday, in an indication that the government is prepared to further weaken the Real to boost a still weak economy.

Mantega says the Real at a reasonable level, but not totally satisfactory

Addressing business leaders in Sao Paulo, Mantega said that a Real weaker than 2 per US dollar is “here to stay”. The Real this week pierced the level of 2.11 per dollar for the first time in over three years.

However the central bank stepped in quickly to prevent the Real from depreciating further by calling a traditional currency swap auction. The announcement drove the Real back to below the 2.10-per-dollar mark.

Central bank chief Alexandre Tombini a day earlier said the monetary authority was ready to provide liquidity to the market to prevent the Real from weakening too much, too fast.

“A weaker Real is helping make Brazilian manufacturers more competitive against foreign rivals”, Tombini said in the congressional hearing.

Tombini added that while the central bank does not target a specific value for the Real, it stands ready to intervene in the currency market when necessary.

“The exchange rate is at a reasonable level, not totally satisfactory, but reasonable,” Mantega said.

A depreciated Real is already having a positive impact on the Brazilian economy, Mantega added, with imports falling and exports of manufactured goods starting to rise, even in an international scenario that is “totally unfavourable”.

The Brazilian economy is expected to grow a meaner 1.5% this year after hitting a two-decade high of 7.5% in 2010. Although local activity is improving, a still weak industrial sector has cast doubts over the recovery's strength.

Mantega also said inflation in Brazil is under control, which could allow for more expansionist monetary policy in Latin America's largest economy.

He also forecasted the Brazilian economy would expand by at least 4% next year.

7 comments Feed

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1 Brasileiro (#) Nov 23rd, 2012 - 09:35 pm Report abuse
Wonderful music......Capitalism OVER!
2 briton (#) Nov 23rd, 2012 - 09:46 pm Report abuse
beatles , rolling stones , slade , queen , wings , shadows ,
thats better.
3 Brasileiro (#) Nov 23rd, 2012 - 11:11 pm Report abuse
Incridibles persons! Like you!!!!
4 British_Kirchnerist (#) Nov 24th, 2012 - 12:40 am Report abuse
#1 I like your style =)

#2 John Lennon, great socialist...
5 briton (#) Nov 24th, 2012 - 08:06 pm Report abuse
Incridibles persons! Like you!!!!
[You mean]
[Incredible person like you]]]

Yes I
6 Ayayay (#) Nov 24th, 2012 - 11:41 pm Report abuse
John Lennon, paid $1 in federal taxes. Part of the reason they passed the Alt Min law for rich ppl.
7 British_Kirchnerist (#) Nov 25th, 2012 - 08:38 am Report abuse
#6 Well I'm glad he did his bit to raise taxes on the rich then =)

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