São Paulo – The problem of excessive appreciation of the Brazilian currency (real) against the dollar will not be resolved in the short term and is out of the government’s reach. The statement was made by the minister of Development, Industry and Foreign Trade, Fernando Pimentel. According to him, Brazil “cannot escape” the international scenario, marked by the United States’ expansionistic monetary policy, which is responsible for the appreciation of the real.
“We cannot simply make up a different scenario. The exchange rate issue, which affects the Brazilian economy in a very serious manner, in particular the industrial sector, has no solution within the framework of our internal governability. There is no telling how long we will have to live with an exchange rate that keeps the real highly appreciated,” said the minister at a meeting with industrialists and unions representatives.
According to Fernando Pimentel, in order to make up for the handicap of having too appreciated a currency, the country will need to implement an active trade defence policy, “whatever is possible,” within the rules of the World Trade Organization (WTO). To counterbalance the exchange rate, the government is also considering lowering tax burdens and fostering financing for investment in innovation and competitiveness.
“I believe that these three tools combined will surely overcome the exchange rate issue, which is a real problem and affects us a lot,” said Pimentel. He stated that the tax lowering measures should be announced early in the second half.
*Translated by Gabriel Pomerancblum
