* BNDES conducted stress tests with real at 2.3/dlr
* Weaker FX rate poses challenge to inflation management
RIO DE JANEIRO, July 14 Brazilian companies are
able to withstand a slightly weaker exchange rate without the
same currency problems they suffered five years ago, the head of
the BNDES development bank said in an interview published on
Luciano Coutinho said stress tests made by the state-owned
bank showed Brazilian firms can absorb the impact of an exchange
rate of 2.3 reais per dollar by the end of the year, but that
managing inflation pressures stemming from a weaker currency
would be a challenge.
"I'm not projecting that exchange rate (by the end of the
year) as this was only a stress test," Coutinho told Folha de
S.Paulo daily. But "this is different from what happened in
2008, when companies incurred heavy losses due to (their
exposure to) currency derivatives."
Many Brazilian companies were caught off guard in 2008 when
the real lost about one-third of its value in a
two-month period around the collapse of Lehman Brothers.
Companies such as pulp producer Aracruz Celulose, meat
processor Sadia and industrial conglomerate Votorantim Group
lost billions of dollars due to bad currency bets in the
derivatives market. Others suffered with growing debt costs from
The real has weakened nearly 15 percent since hitting 1.95
per dollar in the beginning of March, its strongest level this
year, as investors worried about the end of U.S. stimulus
measures that for years have fueled appetite for emerging market
The real closed at 2.2655 on Friday, which means it would
have to weaken less than 2 percent to hit the 2.3-per-dollar
level mentioned by Coutinho.
However the government faces a "challenge," Coutinho said,
as it tries to manage the inflationary impact of a weaker real,
which boosts the prices of imported goods.
"It is imperative to keep inflation under control. That is a
government directive," he said.
Coutinho acknowledged the Brazilian economy had a weak first
quarter as investors adjusted to an expected withdrawal of U.S.
stimulus measures and to higher interest rates domestically.
He said economic growth rates will recover in the medium to
long term following a period of "adjustment," and pointed to
investment opportunities in several industrial and
infrastructure sectors that will benefit from a weaker currency.
Disappointed by recent economic data, analysts have been
revising down their growth estimates for Brazil. Many banks
already forecast the economy will expand less than 2 percent
this year, after growing only 0.9 percent in 2012.