MercoPress. South Atlantic News Agency

Help for Brazilian exporters hit by a “cheap” US dollar

The Brazilian government is preparing a package of measures to help exporters hit by the “cheap” US dollar announced Development, Industry and Trade minister Luiz Fernando Furlan.

Different Brazilian industries have been claiming for months losses caused by the appreciation of the local currency, Real, although in the last few days international financial turbulences have helped the greenback recover some ground.

"The government is concerned and will be offering alternatives to keep the trade dynamics which has enabled the country to triple exports in three years", said Furlan in Sao Paulo during a seminar on Investments and Capital Markets.

Furlan did not offer details but anticipated they could include fiscal benefits, soft credit, modifications to the current money exchange legislation, a possibility that was also advanced a few weeks ago by Finance minister Guido Mantega.

The minister admitted that some industries such as automobiles and footwear have suffered because of the "cheap" US dollar and said the package will be announced before June 15. "We're working to support those industries most affected", he said.

In the last three years Brazil's foreign trade has achieved record surpluses but different estimates indicate that this year the final figure will be below the 44.76 billion US of 2005 because the strong Brazilian currency cuts into the competitiveness of exported goods. This was experienced last May with a trade surplus of 3 billion US dollar, 12.4% down from May 2005. Besides May 2006 surplus was 2.3% lower than April 2006.

Experts have warned that the strong Brazilian currency besides impinging on exports also attracts greater imports thus reducing the overall trade surplus. The US dollar reached its weakest point against the Real early May.

With the current scenario Brazil's trade surplus this year should reach 40.5 billion US dollars, and 35.5 billion in 2007.