QE3: Brazil already coordinated strategy against 'tsunami Money'
After talking with Dilma, Mantega told not hesitate to use arsenal to prevent appreciation of the real
already coordinated with the Finance Minister, Guido Mantega, the strategy of resistance to the possible effects of the measures taken on Thursday, 13, in the United States.
September 13, 2012 | 22h 40
Concerned about a possible return of the "tsunami money," President Dilma Rousseff has already coordinated with the Finance Minister, Guido Mantega, the strategy of resistance to the possible effects of the measures taken on Thursday, 13, in the United States.
Shortly after the Federal Reserve (Fed, the U.S. central bank) announced that monthly inject $ 40 billion in new money in the economy of the United States to revive the economy, Rousseff and Mantega spoke by telephone.
The federal government will not allow the real to appreciate if those dollars issued by the Fed thicken the flow of capital to Brazil - which could value the more real than the government would.
After the call, Mantega fell from the fifth floor of the Ministry of Finance for the auditorium on the ground floor, to announce the payroll tax relief for 25 sectors of the economy. Took the conference to communicate the strategy to the financial market.
"We will not let the real appreciation occurs because the measure (the Fed)." The minister added that the government may resort anytime of the arsenal of measures at its disposal to keep the real devalued.
"We have faced the QE1 and QE2, which were even higher," Mantega said in reference to the policies of quantitative expansion (in English acronym QE) adopted by the Fed between mid 2010 and early 2011.
'Tsunami Money'
On those occasions, the strong injection of dollars into the U.S. economy inflated capital flows to emerging countries, a move that President Dilma last year, dubbed "tsunami money." The government believes that it is still premature to say that the flow of dollars will increase, but the strategy on the economic team is ready.
In last Tuesday, when he announced a package of reform of the electricity sector, Rousseff has stated that the current level of the real was won after "effective actions for the currency artificially valued by tsunamis monetary and monetary policies to fight crisis in developed countries ceased to be an obstacle to the internal market. "
The government's initial understanding is that there are tools and should be used to prevent the return to real value. The mechanisms are buying dollars by the Central Bank (BC), in the spot market, and sell contracts swaps in the financial market, an operation equivalent to buying dollars in the futures market.
A phrase credited to former Minister Antonio Delfim Netto, has been repeated by government economists and presidential aides in Brasilia: "Even with all the cut made by the Central Bank in the benchmark interest rate, the Selic to 7.5% pa a global stage zero interest is the last turkey on Thanksgiving. |
