* Brazil's real shed 0.7 pct vs dollar on Wednesday
* Currency, Brent crude price key to investments -CEO
* FinMin says fuel price policy is good for Brazil
BRASILIA, Nov 21 Further weakening of Brazil's
currency against the dollar could raise pressure on the
government to allow state-led oil company Petrobras
to increase fuel prices, Chief Executive Maria das Graças Foster
said on Wednesday.
Brazil's currency slipped to its weakest
level in 3-1/2 years on Wednesday, shedding 0.7 percent to
2.0944 reais to the dollar. So far this year, currency losses
amount to 11 percent.
Petrobras' refining unit has lost 17.3 billion reais in the
first nine months of 2012 because the government will not let it
raise domestic prices of gasoline and diesel fuel in line with
world crude oil prices.
Since late June, Brent crude oil, the benchmark
Petrobras uses to value its own petroleum output, has risen 23
percent. Petrobras' main share price has fallen 16 percent in
the last month on concerns that rising oil prices and a weaker
real will hurt its ability to develop giant offshore fields.
"Evidently it (all) depends on the behavior of Brent and the
exchange rate," Foster told reporters in Brasilia. "We've had a
depreciation of the real in recent days; its a fact that this
combination of exchange rate and Brent crude defines our ability
Some traders and analysts expect Brazil's government to
loosen its informal trading band for the real and allow the
currency to weaken against the dollar to help boost the economy
by making exports more competitive and imports more expensive.
Brazilian President Dilma Rousseff, a former chairwoman of
Petrobras' board of directors, told the Valor Economico
newspaper on Tuesday that she believes the real is over-valued
and the U.S. dollar under-valued. She has resisted fuel price
increases because they might cause inflation.
Brazilian Finance Minister Guido Mantega, Petrobras' current
chairman of the board, said on Wednesday that the decision not
to raise fuel prices was good for Brazil's economy. Mantega and
Foster both said Petrobras is not having problems raising cash
The refining losses that are result of Petrobras fuel
pricing policies helped the Rio de Janeiro-based oil giant post
its first loss in 13 years in the second quarter. They
contributed to a disappointing third-quarter profit too.
A weaker real could further harm results by boosting the
price of fuel and oil imports, as well as the cost of paying
dollar-denominated debts. It would also make imported and
dollar-indexed equipment more expensive.
When combined with the government's pricing policies, a
weaker real could drain cash even as the company embarks on a
$237 billion five-year expansion plan, the world's biggest
corporate spending program.
Petrobras preferred shares, the company's most-traded class
of stock, fell 2.67 percent on Wednesday in Sao Paulo to 18.62
reais, its lowest close in more than four months.