Mantega Says Brazil Currency Situation Not ‘Ideal’

Mantega Says Brazil Currency Situation Not ‘Ideal’

March 5 (Bloomberg) -- Brazilian Finance Minister Guido Mantega said today the country’s currency situation isn’t “ideal,” signaling the government may step up interventions in the market as it seeks to temper the real’s gains.

“We have a relatively stable situation now,” Mantega said today in a speech from Sao Paulo. “It’s not an ideal situation. We haven’t resolved the competitiveness issue.”


Brazil’s real has gained 51 percent in the past five years, making its exports more expensive in dollar terms and putting local companies at a disadvantage when competing against manufacturers in China. The real headed today to its fourth weekly gain in five weeks, as investors flocked to the country’s stocks and bonds amid ebbing concern about the recovery of the U.S. economy and Greece’s budget deficit.

The real has climbed 1.6 percent so far this week to 1.7786 per dollar at 12:19 p.m. New York time, from 1.8076 on Feb. 26. Today was the currency’s eight consecutive day of gains, the longest winning streak since July.

“As the real drops below 1.80 the government increases the noise, the threats,” Tony Volpon, a Latin America strategist at Nomura Holdings Inc., said in a telephone interview. “We should see a higher level of intervention, but I’m not sure to what extent it will be effective.”

The central bank said it bought dollars in the spot market at an auction today for 1.7793 reais each.

To contact the reporter on this story: Andre Soliani Costa in Brasilia at asoliani@bloomberg.net; Leonardo Lara in Sao Paulo at llara1@bloomberg.net
Last Updated: March 5, 2010 12:37 EST"