By Bruno Federowski
SAO PAULO Aug 19 Brazil's Finance Minister
Guido Mantega advised investors on Monday to avoid big bets
against the real, saying they could lose money if the currency
recovers from recent weakness.
He said the foreign exchange market has been under a lot of
stress as U.S. Treasury yields rise, but said the situation in
Brazil is "under control," with dollars flowing into the
country's stock market and through foreign direct investment.
"Today we had a stressful situation originating mostly in
the United States. There was an increase in speculation and
investors migrated to short-dated bonds from long-dated bonds,"
he told reporters in Sao Paulo, referring to a sell-off in
Brazil's currency and debt markets.
The Brazilian real closed 0.9 percent lower at
2.4152 per dollar, adding to last week's losses of more than 5
percent, even after strong central bank intervention.
Analysts said the real could keep weakening toward 2.5 per
dollar in the short term, while others said it could slide to
2.70 through the end of the year.
But, repeating comments made by central bank chief Alexandre
Tombini earlier on Monday, Mantega cautioned investors against
making one-way bets on the currency.
"It's only natural that investors want to make money, but
they could lose money in the future," he said, adding that
Brazil has a free-floating exchange rate that "fluctuates in
Mantega said the government has several instrument to
intervene in its currency market, including its $370 billion
foreign reserves, and that the central bank and the Treasury are
working together to stabilize financial markets.