Brazil’s central bank said on Friday it aimed to prevent foreign exchange “distortions” but set no target values for its national currency, the real, which is soaring against the US dollar.
“The central bank doesn’t have forex targets ... what we have is a policy of [foreign currency] reserve accumulation to improve the country’s resistance to the crisis,” the head of the institution, Henrique Meirelles, told reporters in Sao Paulo.
The real has gained 26 percent against the dollar so far this year, recovering almost all the ground lost when the global financial crisis hit last September.
Although the dollar initially strengthened during the crisis because of its safe-haven status, it has since weakened considerably as investors looked to higher-risk emerging markets such as Brazil that promise better returns.
On Friday, the real was trading at 1.85 to the dollar.
Brazil’s central bank has been taking advantage of the dollar’s relative weakness over the past three months to bolster its already hefty foreign reserves.
Its purchases of the US unit have seen those reserves swell to a record US$212 billion last month, making Brazil’s exports more expensive in dollar terms.
That has become a point of concern for several exporting companies, which raised that problem in a meeting on Wednesday with Brazilian Finance Minister Guido Mantega, the state news agency Agencia Estado reported.
Although many sectors in Brazil are showing renewed growth powering the country out of a short-lived recession, manufacturing companies are continuing to have difficulty, said Armando Monteiro Neto, head of the National Confederation of Industry.
Brazil could lose market share as a result and see its economy — already heavily reliant on exports such as orange juice, soya, iron and coffee — become dependent on commodities, he said.
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