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Brazil Council To Meet Wed To Change Forex Rules -Estado

SAO PAULO (Dow Jones)--Brazil's National Monetary Council will meet Wednesday to order changes in the country's foreign exchange rules, spokesmen for the council said Tuesday night, according to a media report.

The council, composed of the finance minister, the planning minister and the central bank president, is the Brazilian government's highest economic policy body.

Government sources cited by the local Estado news agency said the council will order changes to foreign exchange rules designed to support the U.S. dollar against the Brazilian real.

Finance Minister Guido Mantega, in comments Tuesday, seemed to be preparing market participants for such changes.

He told reporters that the government was studying a possible liberalization of foreign-exchange rules that would allow exporters to hold more of their dollars overseas, for example.

"Support for exports is a constant concern for Brazil," he said.

Mantega's comment came only hours after he hinted at a broad government revision of foreign exchange rules as a way to counter consistent gains by the Brazilian real against the U.S. dollar in recent years.

The strong real has made some Brazilian manufactured exports such as textiles and footwear less competitive. Meanwhile, it also has introduced a boom in imports resulting in a narrowing of the country's trade surplus.

Currently, Brazilian exporters are permitted to keep only 30% of their receipts in overseas accounts. Foreign exchange liberalization would allow them to keep more of their receipts in overseas accounts, thus reducing inflows of dollars into the Brazilian foreign exchange market.

The real gained 20.2% against the dollar in 2007. So far in 2008, it has advanced another 5% against the U.S. currency.

The 2008 trade surplus through March 9 was $1.667 billion, down sharply from $5.634 billion for the same period of 2007.

-By Gerald Jeffris and Tom Murphy, Dow Jones Newswires; 55-11-3145-1478; brazil@dowjones.com

(END) Dow Jones Newswires

March 11, 2008 17:15 ET (21:15 GMT)


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