Brazil’s Mantega sees no new fx steps for now

Brazil’s government is not planning new measures to curb the local currency at the moment but will continue to evaluate the situation, Finance Minister Guido Mantega said on Wednesday.

Brazil has fought at the forefront of what Mantega calls an international “currency war”, tripling a tax on capital inflows into local bonds to 6 percent last month and regularly buying dollars in the foreign exchange market.

The measures have helped contain the rise in the local currency somewhat, but the real <BRBY> is still up more than 4 percent since late June.

“We will continue to evaluate, I don’t see the need for new measures at the moment,” Mantega told reporters in Brasilia, adding that the dollar was at a “reasonable level”.

“It shows that the measures that we have been taking are efficient and the real is one of the currencies that has risen the least against the dollar. So it’s working,” he said.

But the head of Brazil’s leading business lobby, the National Industry Confederation, or CNI, urged the government to do more to prevent a further appreciation of the real.

“This issue can’t wait. We’re losing competitiveness, important sectors of the economy,” CNI chief Robson Andrade told a news conference on Wednesday.

The measures Andrade proposes include capital gains taxes and minimum maturities on foreign portfolio investments.

“Brazilians pay taxes on their investments. Why wouldn’t foreigners?” asked Andrade.

In the medium-term the government would have to cap government expenditures to help bring double-digit interest rates down. High rates have been the main pull factor for capital inflows boosting the real.

The real on Wednesday traded 0.8 percent higher versus the dollar at 1.724 as the greenback eased against a basket of currencies.