MercoPress. South Atlantic News Agency

President Rousseff happy and supportive of the 2 dollars Real

High interest rates are “incompatible” and pose an obstacle to faster economic growth, said Dilma

The Brazilian Real dropped past 2 per dollars for a second day as President Dilma Rousseff said it has been “extremely overvalued,” encouraging speculation the currency of Latin America’s biggest economy may fall further.

The Real dropped on Monday to that level for the first time in almost three years after Finance Minister Guido Mantega said the exchange rate doesn’t worry the government and as Greece’s turmoil sapped demand for Brazil’s assets. The currency has slid 6.7% in 2012.

The Real slid 0.3% to 2.0019 per US dollar on Tuesday after earlier dropping to 2.0056. The currency touched 2.0062 on Monday, the weakest level since July 2009.

High interest rates that are “incompatible” with the rest of the world pose an obstacle to faster economic growth, Rousseff said on Tuesday at a meeting of mayors in Brasilia, where she also gave her assessment of the currency.

Brazil’s target interest rate has dropped 3.5 percentage points to 9% since August 31, the most among the world’s 25 largest economies. Policy makers may reduce the benchmark to as low as 8% by the end of August, trading in interest-rate futures shows.

The Brazilian central bank bought 7.2 billion dollars in the spot market in April, the most since 8.4 billion in March 2011, to help exporters by weakening the local currency. On Tuesday the Bovespa index fell, erasing this year’s advance, as Brazilian homebuilders plunged after reporting earnings that trailed analysts’ estimates.