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Brazil Ready to Help Exporters Hit by Cheap Dollar

The Brazilian government is preparing a package of measures to help exporters hit by the "cheap" US dollar announced Development, Industry and Trade minister Luiz Fernando Furlan.

Different Brazilian industries have been claiming for months losses caused by the appreciation of the local currency, the real, although in the last few days international financial turbulences have helped the greenback recover some ground.

"The government is concerned and will be offering alternatives to keep the trade dynamics which has enabled the country to triple exports in three years", said Furlan in São Paulo during a seminar on Investments and Capital Markets.

Furlan did not offer details but anticipated they could include fiscal benefits, soft credit, modifications to the current money exchange legislation, a possibility that was also advanced a few weeks ago by Brazil’s Finance Minister Guido Mantega.

The minister admitted that some industries such as automobiles and footwear have suffered because of the "cheap" US dollar and said the package will be announced before June 15. "We’re working to support those industries most affected", he said.

In the last three years Brazil’s foreign trade has achieved record surpluses but different estimates indicate that this year the final figure will be below the US$ 44.76 billion of 2005 because the strong Brazilian currency cuts into the competitiveness of exported goods.

This was experienced last May with a trade surplus of US$ 3 billion, 12.4% down from May 2005. Besides May 2006 surplus was 2.3% lower than April 2006.

Experts have warned that the strong Brazilian currency besides impinging on exports also attracts greater imports thus reducing the overall trade surplus. The US dollar reached its weakest point against the real early May.

With the current scenario Brazil’s trade surplus this year should reach 40.5 billion US dollars, and 35.5 billion in 2007.

Mercopress – www.mercopress.com

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  • Show Comments (4)

  • Guest

    Subsidies?
    Does this “double-speak” mean that Brazil will subsidize producers? If so, then Brazil shouldn’t complain about other nation’s subsidies.

    The devaluation of the Real was the entire force behind the massive increase in exports.

    The source of the current problem is that the value of the Real has since greatly appreciated relative to the rest of the currencies of the world. The only realistic solutions are to reduce taxes on producers, subsidize, reduce the value of the Real (one way or another), or accept that there will be less exports.

    The way things are now, Brazil is headed for a situation similar to the one that Argentina had in the early 1990’s. It was costing producers $2.00 to produce goods that they could sell on the international market for $1.00. As a result, exports were drastically reduced and the producers were going broke and holding street protests.

    It’s really all about exchange rates.

  • Guest

    re:
    If you want more shit, don’t worry! Some of the people who post on this site will give you all of the shit that you can handle.

    πŸ™‚

  • Guest

    this is bullshit
    cheaper currencie you sell more but you can buy less shit and less shit is not good

  • Guest

    Strange statement !
    Especially from a supposed “knowlegable” official !

    It is the Brazilian Real that has been strong against ALL the world major currencies during the last 3 years….after the previous years currency collapse !

    Soooooo….simple !

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