* Currency management helping protect local industry-Mantega
* Inflation targeting, fiscal discipline still key
* Says does not see risk of inflation breaking target ceiling
SAO PAULO, Oct 24 (Reuters) - Brazil’s Finance Minister Guido Mantega said in an interview published Wednesday that while inflation targeting and a solid fiscal policy would remain “permanent and fundamental,” Brazil’s floating exchange rate “depends on what the rest of the world is doing.”
“Our system is a dirty float, same as everyone‘s,” Mantega told local newspaper Valor Economico, adding that currency management would last as long as necessary to defend the country from a global exchange rate conflict.
“We cannot continue watching as others take ownership of our market and bring down our industry,” he said.
Mantega added that the weaker exchange rate, combined with recent tax breaks and cuts in energy prices, has put industry on a more competitive footing.
Brazil’s currency, the real has been trading in a narrow band between 2.01 to 2.05 to the U.S. dollar since early July, with the central bank often stepping in to limit gains in the real through the offering of reverse currency swaps.
Investors have been questioning Brazil’s commitment to the so-called “tripod” of economic policies -- inflation targeting, fiscal responsibility, and a floating exchange rate -- which has been considered central to the country’s economic stability since 1999.
But Mantega said he did not see inflation posing a risk of breaking the 6.5 percent target ceiling, partly due to the lack of inflation pressure from abroad, and that the government was not considering relaxing the target.
Although Mantega reinforced Brazil’s commitment to fiscal targets, he suggested that the government could be flexible on this year’s goal due to the deduction of investment expenditures.