SAO PAULO (MNI) - The Brazilian government Monday announced it has authorized the Sovereign Wealth Fund of Brazil (FSB) to acquire foreign currency, in a move that was widely expected given the continued strength of the real.
The FSB governing council, made up of the Finance, Planning and Management and Budget Ministries as well as the president of the Central Bank, met Friday and approved the move, the Finance Ministry said in a statement.
The council, which defines the FSB's investments, said there will be "no limit on foreign currency operations."
The FSB investments will not have an impact on the budget, the statement said.
In recent weeks, complaints about the strong real from exporters and politicians, including Finance Minister Guido Mantega, have grown.
The Central Bank has increased its spot market dollar purchases and has consulted trading desks on demand for reverse currency swap contracts. Many traders expect such contracts to be offered if the real breaks 1.70.
At the start of Monday afternoon trading in Sao Paulo, the real was trading at 1.718 to the dollar, up 0.06% compared to Friday's close.
The Liquid Team - 20 Sep 2010
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