MercoPress. South Atlantic News Agency

Brazilian exporters demanding a “weaker” Real to regain competitive edge

Bunge Brasil CEO Pedro Parente: strength of the Real is “very worrying”

The strength of the Brazilian Real against the US dollar is “very worrying” for the country's exporters, with many companies struggling with higher production costs and a reduced ability to compete in global markets, Bunge Brasil CEO Pedro Parente said Thursday.

“Any export company that generates revenue in dollars and has costs based in Real is facing a strategic problem” Parente said on the sidelines of the World Economic Forum on Latin America. “It's an important and difficult question to confront, but it's relevant to exporters and the government needs to pay attention.”

Brazil's government has implemented measures designed to stem heavy capital inflows, but the moves have failed to make a serious dent in the Real's appreciation over the past two years. Parente pointed to the U.S. Federal Reserve's controversial 600 billion USD bond-buying program as a key factor in heightened global liquidity that has caused emerging-market currencies such as the real to soar versus the dollar.

Despite indications from Fed Chairman Ben Bernanke on Wednesday that the monetary authority will allow the program to expire in June, liquidity will likely remain at elevated levels for the foreseeable future, Parente said.

”It's important to remember that the Fed said it's just going to stop making purchases, but that it will also be reinvesting proceeds. That will maintain (liquidity) at current levels,“ Parente said.

While Parente declined to talk about possible target levels for the Brazilian currency, he did say that exporters faced a competitive disadvantage with the Real at current levels.

”The Real needs to weaken to an adequate point that will allow the country to compete,” Parente said.