Brazil Will Keep Floating Exchange Rates, Guarantees Lula

    Exchange rates will continue to fluctuate in Brazil. This declaration was made by Brazilian President Luiz Inácio Lula da Silva, in the north of Tocantins, during a visit to a construction site on the North-South Railway.

    The president’s comment reinforces various opinions expressed in recent weeks about possible changes in exchange rate policy.

    "The exchange rate will continue to fluctuate. Rest assured that there will be no change in exchange rate policy," Lula guaranteed, after assuring that the government will continue to pursue fiscal stringency and explaining:

    "We have attained our present state of tranquility up to now, and we will not discard the gains we have achieved."

    On Tuesday, May 23, the Minister of Finance, Guido Mantega, affirmed once again that the federal government is studying alterations in currency exchange legislation, but he ruled out any type of interference in currency markets.

    He said that the object of the measures would be to help export industries. With the appreciated value of the real in relation to the dollar, it is more expensive for foreign consumers to purchase merchandise produced in Brazil.

    The minister characterized the bill in the National Congress on this subject as "too open-ended" and said that the Administration intends to submit a new proposal to the House.

    The current bill, authored by the government’s leader in the Congress, senator Fernando Bezerra (PTB, Rio Grande do Norte state), would permit exporters to maintain foreign currency bank accounts in Brazil and pay debts abroad without having to exchange money in Brazil.

    Commerce Sales

    After two years of falling revenue, there was 11.7% growth in income in the commerce sector in 2004, compared to 2003. That was the largest increase since 1996, when the government statistical bureau (Instituto Brasileiro de Geografia e Estatí­stica) (IBGE) began its Annual Commercial Survey. The IBGE report shows that the commerce sector had total revenue of US$ 353 billion in 2004.

    According to the IBGE, sales got a boost from the introduction of flex-fuel cars (which run on gasoline and ethanol).

    The survey found 1.38 million businesses in Brazil, up 9.1%, compared to 2003.

    Agência Brasil

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