* Mantega says real trading at competitive level
* Says gov't to intervene if appreciation is too sharp
BRASILIA Jan 30 Brazilian Finance Minister
Guido Mantega on Wednesday signaled he is comfortable with the
recent appreciation of the real, but warned that the government
will not allow the currency to strengthen too much, too quickly.
The Brazilian real this week has strengthened past
the 2-per-dollar mark for the first time in nearly seven months
in an apparent loosening of government efforts to weaken it to
help local exporters.
"As long as the exchange fluctuates within a level that
keeps local industries competitive, then it can fluctuate,"
Mantega told reporters in Brasilia.
"We are not changing our currency policy. That policy will
not allow the speculative appreciation of the real... don't get
your hopes up because we will not change that policy."
He warned investors that the government will not allow a
"meltdown" of the exchange rate.
The real added to losses after Mantega's comments,
weakening 0.69 percent to 1.9980 per U.S. dollar on Wednesday
Most traders and analysts believe that the central bank has
allowed the real to appreciate to reduce inflationary pressures
at a time when prices are rapidly rising. A stronger real lowers
the price of imports.
Mantega dismissed that idea and said exchange rate
intervention is not a tool to fight inflation.
He added that an increase in gasoline prices announced on
Tuesday should add 0.16 percent to inflation this year.