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Microcap & Penny Stocks : Madera International - Symbol WOOD
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To: Spider Valdez who wrote (1566)3/30/1999 11:37:00 AM
From: Henry Volquardsen  Read Replies (3) of 1979
 
"U.S. corresponding bank located in Brazil" probably refers to a Brazilian domiciled bank with a correspondent relationship with a US bank. Pretty standard stuff. This would allow the Brazilian bank to help clients with US dollar needs. The dollar account would be located in the US not in Brazil.

Technically you are correct that you cannot have a US dollar account in Brazil but that is irrelevant. The Brazilian company would simply open an account in the US and keep the dollars there, no fuss no muss. Any US bank in Brazil would set up the account in the US and many Brazilian banks have branches in the US. Those that don't would simply use a correspondent.

When they want to remit the dollars to pay local expenses any bank can handle this. There is no requirement to wire funds to the Banco do Brasil In LA.

And while Brazilians can't technically hold dollars in Brazil they can get dollar linked investments such as LTNs. Technically these assets will be in reals but they will earn any change in the dollar/real index plus an interest rate. The interest rates will be higher than US interest rates as it reflects Brazilian sovereign risk.

So any Brazilian exporter receiving dollars will have plenty of options for holding dollars and very little difficulty in remitting dollars to cover local real expenses. Any company in this position has benefitted greatly from the real devaluation. There is no need for a black market.
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