Finance Minister Rushes Back to Brazil After Investors Start Dumping Real for Dollar

Real currency and dollar Guido Mantega, Brazil’s Finance Minister, is back in Brazil after a busy time in Washington DC for the IMF/World Bank meeting during the weekend. He hurried back home after a plunge in the real extended the world’s biggest currency slump over the past month. 

“We need to be there in case there is more volatility in the markets,” Mantega told reporters in Washington before he left for Brazil late Saturday, a day earlier than scheduled. “It’s better to be back in the country, but the situation in Brazil is calm.”

Policy makers in Latin America, after spending the past year fighting currency gains, have seen those policies upended as the European debt crisis leads investors to dump emerging market assets and seek safety in the US dollar.

After rallying 43% since the end of 2008 through August, the Brazilian currency Real has plunged 13% over the past 30 days.

While the central bank acted in the currency futures market last week for the first time since 2008 in a bid to stem the rout, the government hasn’t decided whether to roll back any measures taken to curb currency gains.

Since last year, the government has tripled a tax of foreign purchases of domestic bonds, increased reserve requirements on short dollar positions and raised levies on foreign loans.

The so-called IOF tax on foreign investors’ purchases of Brazil’s fixed income assets could be withdrawn “when it’s no longer needed,” Mantega said.

The real jumped 3.9% Sept. 23 to 1.8339 per dollar, paring its biggest weekly loss since November 2008 on speculation the government may revoke the tax.

Brazil’s central bank on Sept. 22 auctioned swaps, the equivalent to selling dollars in the futures market, for the first time since 2008, helping the real rebound from a two-year low.

The central bank president Alexandre Tombini in Washington said he is ready to inject more liquidity into the market to protect the real from international volatility, a government official said policy makers see no need for now to sell any of their record US$ 351 billion in reserves.

Rousseff’s government must help the central bank by “holding the line” on spending and keeping Brazil’s fiscal house in order, Tombini added.

Mercopress

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Your email address will not be published.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

1 Million Linux- and Crank-Powered US$ 100 Laptops Coming to Brazil

The US$ 100 laptop that is a brainchild of the Massachusetts Institute of Technology ...

European Union Lets Brazil Down

“Below expectations.” That was the initial reaction from Brazil’s Ministry of Foreign Relations (Itamaraty), ...

US Ambassador to Brazil Held Hostage to Republican Senator’s Intransigence

Nine months after President Barack Obama took office, Washington still lacks two of its ...

Just Passing Through

Foreigners feel they would never be able to live like Brazilians and cannot understand ...

Digital and Free Internet Coming Soon to Brazilian TV

High definition image, digital sound, stable signal, interactivity, multiple channels, and the possibility of ...

For Paraguay Brazil’s Control of Jointly-Owned Itaipu Hydroelectric Is Absurd

For Ricardo Canese, member of the Mercosur Parliament in representation of Paraguay. the asymmetries ...

Brazilian Market Soars Anticipating Good News in the Interests Front

Latin American stocks were supported by a strong jump in Brazilian shares and impressive ...

Brazil’s Atech on the Cutting Edge of Air Traffic Control

Atech Tecnologias CrÀ­ticas, a Brazilian technology company, has just signed a contract to develop ...

Brazil Has Already Saved US$ 23 Billion this Year to Pay Debt Interest

The primary surplus – which represents money saved by the federal government to repay ...