The financial sector in Brazil is complaining for nor reason, says Guido Mantega, the Brazilian Economy minister using a colorful Portuguese expression "crying with a full belly" (chorando de barriga cheia). His comment came as direct response to complaints about inflowing capital tax which was decided this week to prevent a foreign exchange bubble between the local real and the US dollar.
"They are crying with a full belly because never before in the history of the Brazilian stock exchange has there been such a fantastic expansion. Today it has become one of the largest and main markets of the world thanks to the administration of President Luiz Inácio Lula da Silva. You can't have all", said Mantega.
The São Paulo Bovespa stock exchange top officials formally complained about the 2% tax on foreign financial investment in Brazilian assets and deposits, the famous "carry trade" taking advantage of the anemic US dollar and soaring Brazilian Real. The Bovespa index has jumped 65% so far this year.
"We want to avoid a foreign exchange bubble. I can understand they want more operations but I'm against excesses and exaggerations," said Mantega quoted by the Folha de S. Paulo daily newspaper.
Mantega said that without the measures adopted by the Brazilian government, the US dollar which now quotes at 1.72 reais could have plunged in the coming weeks to 1.30 reais because of the massive influx of US dollars looking for assets to protect the value of the investment.
The US dollar has depreciated 25% against the Real in the ten months of 2009.
"Because we have been the first in coming out of the global crisis, our economy has become a magnet for the excess capital roaming the world. These measures are geared to eliminate misbalances which could affect production and the real economy", added Mantega.
Brazil's Economy minister said that a new package of measures to alleviate costs for exporters and the fall in the US dollar, will soon be implemented.
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