government's long-term plan to make BRL fully convertible currency overseas.
MQ and Elroy can hold some under their matress
Brazil unveils new real bills, eyes convertibility-UPDATE 1
Thursday February 04, 2010 11:51:20 PM GMT
BRAZIL-ECONOMY/REAL (UPDATE 1,PIX)
* Brazil unveils new, more secure local currency bills
* Key step in push to eventually make real convertible
* Analysts say full-convertibility still a ways off (Adds analyst quotes, background and byline)
By Ana Nicolaci da Costa
BRASILIA, Feb 3 (Reuters) - Brazil unveiled new local currency bills on Wednesday that are harder to counterfeit, a key step in the government's long-term plan to make the Brazilian real a fully convertible currency overseas.
With Brazil emerging as an economic powerhouse and playing a greater role on the global diplomatic stage, the country has become a magnet for capital inflows, helping make the real one of the world's best performing currencies in 2009.
At a ceremony in the capital to unveil the new bills, Finance Minister Guido Mantega said the real's strength is a reflection of Brazil's robust economy and that the currency is on track to eventually becoming fully convertible -- meaning it could be freely traded and exchanged anywhere into other major currencies.
"We have to prepare ourselves for the real to become a currency of international circulation," Mantega said, adding that more resilient bills that are harder to counterfeit are crucial to increasing the real's allure globally.
"There is already some demand for the real to be used outside the country," he added.
But analysts say full-convertibility is still a way off due to obstacles including restrictions on foreign exchange trading and on Brazilians holding local bank accounts in U.S. dollars.
"Full convertibility is still a number of years away. They would have to lift restrictions now in place with the capital account and this may take some time," Clyde Wardle, emerging markets currency strategist at HSBC in New York.
Roberto Padovani, chief strategist at WestLB in Brazil, said it would be a project for the next ten years.
"I think everyone would agree that the country is moving in that direction. But I don't know if it is something for the short-term."
NEW BILLS
The first new bills, of 50 reais ($27) and 100 reais, will gradually go into circulation this year. Bills of 10 and 20 reais will come in the first half of 2011, and 2 and 5 real bills a year later.
The bills look very similar to those currently in circulation, with minor changes aimed at deterring counterfeiters.
"With the stabilization of the Brazilian economy and stable inflation within target, the real is increasingly becoming a reserve of value," Central Bank President Henrique Meirelles said at the same event. |
