(Corrects day of week from Tuesday to Wednesday in first
By Paula Laier and Alonso Soto
BRASILIA, Sept 18 One of the most vocal critics
of the United States' monetary policy, Brazilian Finance
Minister Guido Mantega, on Wednesday cheered the Federal
Reserve's decision to leave stimulus unchanged, saying it may
signal an end to market turmoil.
Mantega, who gained international fame for using the term
"currency wars" to describe rich nations efforts to lift exports
by weakening their currencies, said a gradual stimulus
withdrawal may boost Latin America's largest economy.
"Volatility could be dissipating and this will help improve
the business climate," said Mantega, who has accused the Fed of
triggering recent market volatility with "confusing" guidance.
The specter of a cut in the Fed's bond-buying program has
driven investors out of emerging-market countries en masse,
threatening the once high-flying economies as the value of local
assets plunged to multi-year lows.
Latin American currencies, stocks and bonds quickly soared
on Wednesday after the U.S. central bank surprisingly decided to
stick to the stimulus plan for now, fearing higher borrowing
costs could undermine the country's recovery.
Brazil's real jumped nearly 3 percent to close
at 2.1935 per dollar, its strongest since late June.
"The Fed is signaling a soft landing ... that it will cut
(stimulus) more slowly," Mantega said.
He said a slightly stronger real could prop up local
economic activity, ease inflationary pressures and reduce a
widening gap in the country's external accounts.
Mantega went as far as to say that Brazil's own central bank
may not need to use all of the $60 billion it earmarked for a
daily forex intervention program that aims to ease the real's
Less than a year ago, Brazil was rooting for exactly the
opposite. Then an avalanche of cheap money flowing from the
United States prompted President Dilma Rousseff to set up
capital barriers to halt a sharp currency appreciation that
threatened local producers and exporters.
(Reporting by Paula Laier, Luciana Otoni and Alonso Soto;
Editing by Andre Grenon and Stacey Joyce)