Brazil finmin says will continue to act to curb FX overvaluation
LONDON, July 5
LONDON, July 5 (Reuters) - Brazil will continue to act to restrain the strength of its currency with intervention in the futures and derivatives markets among its possible options, said the country's finance minister on Tuesday.
"The government will continue to take measures to contain the overvaluation of exchange rate...We've taken measures on reserve requirements, we can take measures on derivative and futures. But these are not measures we will pre-announce," Guido Mantega told reporters in London, via a translator.
Speaking at the sidelines of an investor conference, Mantega also said no credit and capital market bubbles were forming in Latin America's largest economy despite its robust expansion.
"As far as inflation is concerned, the rate is decreasing. All indicators point to the deceleration of inflation. Next month, inflation will be lower because commodity (prices) are lower, fuel and gasoline prices are lower," he said.
Brazil's real closed on Monday at its strongest level against the dollar in 12 years with inflows from Asia reportedly boosting the currency.
"We have always taken measures to adjust growth to our potential...If necessary the central bank will keep raising interest rates but that's the decision of the central bank," Mantega added.
The minister said the economy was on track for growth of 4.5 percent -- higher than the 4.0 percent forecast by the central bank and analysts' forecast of 3.94 percent.
Mantega also said that the country had achieved more than half of its primary surplus target this year and that the government's reform agenda included reducing investments taxes. (Reporting by Sebastian Tong, editing by Natsuko Waki)