* Central bank worried by recent drop, Valor says
* Government unhappy with real at current levels
* Renewed inflation fears behind recent measures
SAO PAULO, Dec 6 Brazilian government and
central bank officials are concerned that the recent
depreciation of the country's currency could stoke inflation,
leading to recent steps to gradually dismantle some capital
controls, newspaper Valor Econômico reported on Thursday.
Valor, citing unnamed sources, said policymakers are alarmed
by the exchange rate's recent levels, after the currency slipped
past 2.13 per dollar this week. Contrary to the view of many
investors and analysts covering Brazil's foreign exchange
market, officials do not want to sanction any particular
exchange rate, the newspaper added.
The report highlights competing concerns about Brazil's
currency, the real. The government has worked to weaken
the real by more than 10 percent this year in order to bolster
exports and support a fragile economic recovery.
The currency plunged to its weakest in over 3-1/2 years
after surprisingly weak growth data last week, bolstering
worries that more expensive imports would speed inflation.
The newspaper said that in terms of the currency policy,
"the message that is being transmitted is different," meaning
that a weaker currency could hamper investment and hurt
companies with heavy dollar debt.
This week the government began to ease restrictions on
capital inflows, namely the imposition of tax surcharges on
foreign corporate borrowing transactions and barriers to the
entry of export revenue into the country.
In addition, traders began to test what has been understood
as the currency's trading range allegedly defended by the
government at a moment of rising seasonal demand for dollars,
The real traded at 2.085 per dollar in early
Thursday trading, 0.5 percent stronger than at Wednesday's