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UPDATE 1-Brazil FX rate closer to ideal for economy-official
November 29, 2012 / 6:15 PM / 5 years ago

UPDATE 1-Brazil FX rate closer to ideal for economy-official

* Treasury chief says weaker currency to help economy

* Real weakened past 2.10 earlier on Wednesday, trimmed losses

* Augustin says Brazil likely to issue global debt this year

BRASILIA, Nov 29 (Reuters) - Brazil’s exchange rate is currently at a level that is closer to what is best for the local economy, Treasury chief Arno Augustin said on Thursday, adding to signs that the government favors a weaker real to boost a lagging industrial sector.

“We are at a level that is closer to what we believe is best for the Brazilian economy,” said Augustin, adding that it will take some time for a weaker exhange rate to positively impact the economy.

The real earlier on Thursday weakened past 2.10 per dollar, considered to be the limit of an informal trading band of 2.0-2.10 per dollar enforced recently by the central bank through market interventions. The currency later trimmed some of its losses on investor expectations that the bank could intervene again if the currency continued to slide.

At 3:43 p.m. (1743 GMT), the real was trading 0.40 percent weaker at 2.0980 per U.S. dollar.

President Dilma Rousseff and other government officials have said there is room for the currency to depreciate more to help an industry that is recovering slowly after a barrage of government stimulus.

Augustin added that the government could sell global bonds, most likely denominated in U.S. dollars, in the final weeks of the year to help improve conditions for Brazilian companies planning to sell debt abroad.

The Brazilian government has completed three global debt sales this year, twice in dollars and once in reais.

Brazil secured its cheapest borrowing cost ever in September after selling $1.35 billion of dollar-denominated, 10-year global bonds with a spread of 110 basis points over comparable U.S. Treasury debt.

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