* Real trading below central bank's model
* Cenbank prepared to offer dollars to market
* FDI projected to reach over $66 bln in 2012
By Walter Brandimarte
RIO DE JANEIRO, Dec 10 Brazil's central bank
believes the real is slightly weaker than it should be and will
continue to offer dollar liquidity to the foreign exchange
market in case of shortage of the U.S. currency at year end, a
top director with the bank said on Monday.
The real was trading around 2.08 per dollar
when Aldo Mendes, the central bank's director of monetary
policy, said the currency was slightly weaker than the level
projected by a central bank model.
"There is a bit of fat there," Mendes told reporters when
asked if the central bank was comfortable with the current
exchange rate level. He was referring to the value of the dollar
against the real, which reached a 3-1/2-year high of 2.1299 just
10 days ago.
Since then, a series of government actions that included
direct interventions in the FX market and measures facilitating
dollar inflows caused the real to strengthen about 2.5 percent.
The central bank is ready to provide liquidity through the
sale of traditional currency swaps -- derivatives which emulate
the sale of dollars in the futures market -- or through the
direct sale of greenbacks on the spot market, Mendes told a
gathering of business leaders in Rio de Janeiro.
His remarks slightly added to the real's gains on Monday. It
closed at 2.0765, 0.7 percent stronger for the day.
Last week's actions to strengthen the currency confused many
investors and economists who, after a series of comments by
President Dilma Rousseff and Finance Minister Guido Mantega, had
been led to believe the government wanted a weaker real to boost
Mendes' remarks on Monday reinforced a market view that the
central bank wants the real back within the narrow trading range
of 2.0-2.1 per dollar it had been stuck since early July.
Mendes denied the existence of such a band, however, as he
tried to assure business leaders that the government remains
committed to key macroeconomic policies that are considered the
basis for Brazil's economic stability over the past decade.
"The goal of seeking the midpoint of the inflation target
range remains in place. The central bank doesn't have a target
for the currency," he said.
An inflation-targeting regime along with a floating exchange
rate and fiscal responsibility are considered the three pillars
of Brazil's macroeconomic stability.
Despite expectations for a seasonal shortage of dollars at
the end of the year, Mendes said foreign direct investment in
Brazil will end this year at more than $66 billion.
The supply of dollars is often crimped in December as
multinational companies and foreign investors send profit home
to close annual accounts and Brazilian companies make year-end
payments on debt.
The central bank had previously estimated $60 billion in
foreign direct investment in Brazil this year.