Brazil Removal of Outflow Barriers Is ‘Inevitable,’ WestLB Says - Bloomberg.com

Brazil Removal of Outflow Barriers Is ‘Inevitable,’ WestLB Says
By Camila Fontana

Nov. 4 (Bloomberg) -- The removal of barriers to the outflow of dollars from Brazil is inevitable, said Ures Folchini, executive vice-president of local markets at Banco WestLB do Brasil.

Central bank President Henrique Meirelles said late yesterday that Brazil is conducting studies to remove “artificial impediments” to outflows of foreign currencies.

Meirelles, speaking at an event in Oxford, U.K., said the country needs to “modernize” its exchange rate system.

The Brazilian real is the best performer against the dollar this year among 26 emerging-market currencies tracked by Bloomberg, with a 34 percent gain.

The real rose 0.7 percent to 1.7330 per U.S. dollar at 7:57 a.m. New York time, from 1.7446 yesterday.

WestLB predicts the real will finish the year at 1.65 per dollar. Folchini spoke in a phone interview from Sao Paulo.

On the proposal by the central bank:

“This is an inevitable step that is seen as an advancement by the market. Our economy is becoming increasingly important.

“You know you can get out if you need to. You get more comfortable to invest, that helps the real to go up.”

On the real’s direction:

“The real is following the trend of other currencies against the dollar, with smaller or greater intensity. Even the measures that were taken by the government to curb gains won’t interrupt this trend.”

On capital flows into Brazilian securities:

“The window for companies to issue bonds is very large.”

To contact the reporter on this story: Camila Fontana Correa in Sao Paulo at cfontana@bloomberg.net
Last Updated: November 4, 2009 08:04 EST"