Brazil Trying to Prop Up the Falling Dollar

Bovespa in action Brazil's currency, the real, appreciation against the dollar  is a "cause for concern," but also reflect international investors' growing interest in the nation's assets, Finance Minister Guido Mantega said on Friday.

"The appreciation of the exchange rate results from investors' enthusiasm about Brazil because the country offers more stable, secure conditions," Mantega told reporters.

But he also admitted "the (currency) gains harm the productive sector, exporters and farming. In fact it is a cause for concern," he added.

The US dollar dropped to 2.02 Reais in Brazilian money markets on Friday, having lost 4% during the week.

Mantega's comments mirror those of Central Bank President Henrique Meirelles on Thursday warning against "excessive euphoria" in currency markets. The bank has bought dollars in the spot foreign exchange market every session since May 8 in a bid to soak up a flood of greenbacks to Brazil and ease the real appreciation.

The currency has gained 15% since the beginning of the year and surged more than 20% since reaching a three-month low in early March.

Asked how the government could limit gains in Brazil's currency, Mantega said the central bank was already buying dollars and increasing international reserves "which, by the way, is one of the reasons why we are solid."

Mantega anticipated Brazil's economy would grow between 3% and 4% in the fourth quarter of this year, recovering after a deep slump in the first months of the year.

The central bank has signaled it will continue to lower domestic interest rates, a step that is in "the right direction," he added.

"The conditions are there for the economy to grow after a tumble in the last quarter of last year," Mantega said. "The recovery is under way, with a slower rebound in the second half that will gain steam toward the end of the year."

Trade Surplus

The Brazilian trade surplus (exports minus imports) totaled US$ 698 million in the third week of May, and the accumulated result in the month so far is US$ 1.750 billion. The information was supplied by the Brazilian Ministry of Development, Industry and Foreign Trade.

Last week, exports totaled US$ 3.129 billion and imports, US$ 2.431 billion. In the month of May, up until now, exports amount to US$ 9.078 billion and imports, US$ 7.328 billion.

From January until the third week of May, exports have totaled US$ 52.577 billion and imports, US$ 44.105 billion, resulting in a surplus of US$ 8.472 billion. The figure is 26.1% higher than the one recorded during the same period of 2008 (US$ 6.717 billion).

Mercopress/Bzz

Tags:

  • Show Comments (0)

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Time to Stop Crying and Start Working, Says Brazil’s Lula

“Brazil cannot squander and lose an exceptional opportunity to consolidate itself and rise above ...

Wars: There and Here

Nothing new in the media front. The question of Iraq was erroneously conveyed and ...

Lula Gives the IDB Lots of Ideas on How to Help Brazil

Brazil’s President Luiz Inácio Lula da Silva asked Thursday, February 16, the Inter-American Development ...

Despite Progress Brazilian Workers Without Contract Are Still 12% of Total

In Brazil, the number of workers in the private sector shadow economy (sem carteira ...

Brazilian Small Oil Equipment Companies Get a Chance to Export

Micro and small companies in Brazil linked to the oil and gas sectors, which ...

Brazil’s Lula Asks Media Not to Play Terrorism with Swine Flu

Brazil is prepared to face the challenge brought by the swine flu, according to ...

US Senator Defends UN Permanent Seat for Brazil

US Senator Norm Coleman, a Republican from the state of Minnesota defended Brazil’s entry ...

Almost 1 million Brazilians Stop Receiving their Family Allowance

Over 700 thousand Brazilians have lost their Bolsa Família (Family Allowance), a monthly voucher ...

Brazil's O Boticário store in Cairo, Egypt

Brazil’s Perfume-Maker O Boticí¡rio Adds Egypt to Its International Clientele

Egypt is not only the cradle of a millenary civilization. According to archaeologists and ...