* Brazil's real shed 0.7 pct vs dollar on Wednesday
* Currency, Brent crude price key to investments -CEO
* FinMin says fuel price policy is good for Brazil
BRASILIA, Nov 21 (Reuters) - Further weakening of Brazil's currency against the dollar could raise pressure on the government to allow state-led oil company Petrobras to increase fuel prices, Chief Executive Maria das Graças Foster said on Wednesday.
Brazil's currency slipped to its weakest level in 3-1/2 years on Wednesday, shedding 0.7 percent to 2.0944 reais to the dollar. So far this year, currency losses amount to 11 percent.
Petrobras' refining unit has lost 17.3 billion reais in the first nine months of 2012 because the government will not let it raise domestic prices of gasoline and diesel fuel in line with world crude oil prices.
Since late June, Brent crude oil, the benchmark Petrobras uses to value its own petroleum output, has risen 23 percent. Petrobras' main share price has fallen 16 percent in the last month on concerns that rising oil prices and a weaker real will hurt its ability to develop giant offshore fields.
"Evidently it (all) depends on the behavior of Brent and the exchange rate," Foster told reporters in Brasilia. "We've had a depreciation of the real in recent days; its a fact that this combination of exchange rate and Brent crude defines our ability to invest."
Some traders and analysts expect Brazil's government to loosen its informal trading band for the real and allow the currency to weaken against the dollar to help boost the economy by making exports more competitive and imports more expensive.
Brazilian President Dilma Rousseff, a former chairwoman of Petrobras' board of directors, told the Valor Economico newspaper on Tuesday that she believes the real is over-valued and the U.S. dollar under-valued. She has resisted fuel price increases because they might cause inflation.
Brazilian Finance Minister Guido Mantega, Petrobras' current chairman of the board, said on Wednesday that the decision not to raise fuel prices was good for Brazil's economy. Mantega and Foster both said Petrobras is not having problems raising cash for investment.
The refining losses that are result of Petrobras fuel pricing policies helped the Rio de Janeiro-based oil giant post its first loss in 13 years in the second quarter. They contributed to a disappointing third-quarter profit too.
A weaker real could further harm results by boosting the price of fuel and oil imports, as well as the cost of paying dollar-denominated debts. It would also make imported and dollar-indexed equipment more expensive.
When combined with the government's pricing policies, a weaker real could drain cash even as the company embarks on a $237 billion five-year expansion plan, the world's biggest corporate spending program.
Petrobras preferred shares, the company's most-traded class of stock, fell 2.67 percent on Wednesday in Sao Paulo to 18.62 reais, its lowest close in more than four months.