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Brazil real seen around 2 to dlr, development minister says-Valor
February 8, 2013 / 10:51 AM / in 5 years

Brazil real seen around 2 to dlr, development minister says-Valor

* Pimentel says real between 1.96 and 2.05/dlr is acceptable

* Brazil to give tax breaks to all sectors of economy

RIO DE JANEIRO, Feb 8 (Reuters) - Brazil’s Development Minister Fernando Pimentel joined the government chorus that advocates an exchange rate around 2 reais per dollar to boost investment without hurting the country’s industry.

In an interview with Valor Economico newspaper published on Friday, Pimentel said the government is “monitoring” the real to ensure it floats around the mark of 2 per dollar, “without falling or rising too much.”

He went further to say that an acceptable range for the real would be between 1.96 and 2.05 per dollar.

“We’re not going to have an exchange rate that hurts our industry, that we won’t have anymore,” he said. “But we also won’t feed the illusion of an excessively devalued currency, where everybody thinks we suddenly recovered our competitiveness.”

The real weakened about 30 percent versus the U.S. dollar between July and November, when it touched a 3-1/2-year low of 2.13 per dollar, but it has been strenthening since then.

It closed Thursday at 1.9705 per greenback as investors believe policymakers now favor a stronger currency to help fight inflation, which has neared the ceiling of a government target.

An exchange rate around 2 reais per dollar was also considered as acceptable by Finance Minister Guido Mantega. In an interview with Reuters on Thursday, Mantega said the real is floating “without causing damage to the exporter nor to the importer of machinery and equipment.”

Facilitating imports of machinery is seen as crucial for Brazil to unlock much-needed investment in industry.

Pimentel also reiterated that, in order to boost investment, the government will give more payroll tax breaks “to all sectors of the economy in the medium term.”

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