Financial Regulatory Forum

Brazil central bank mulls measures to modernize foreign exchange trading

By Reuters Staff
March 5, 2010

By Vivianne Rodrigues and Ana Nicolaci da Costa

NEW YORK, March 5 (Reuters) – Brazil’s central bank is studying measures to modernize the country’s foreign exchange trading, central bank chief Henrique Meirelles said on Friday.

The measures, mostly technical, seek to make the Brazilian foreign exchange markets more “efficient,” which could also result in an increase in overall flows, Meirelles told journalists.

He said the central bank has recently resumed work on an overhaul of its currency laws, which were set up in the 1930′s when hard currencies were scarce.

Finance Minister Guido Mantega said in February that Brazil had to prepare itself for the local currency, the real, to become a currency of international circulation.

Those comments came after the real rallied around 34 percent last year, inspiring the government to slap a tax on capital inflow into stocks and fixed-income.

“We are studying measures to expand the forex market, make it more friendly and to expand it overall beyond exporters,” Meirelles said. “We expect the modernization of the forex market to impact several trading practices. It may obviously have an impact on overall flows.” (Editing by Leslie Adler) ((vivianne.rodrigues@reuters.com ; +1 646 223 6102 and ana.nicolacidacosta@thomsonreuters.com; Reuters Messaging: vivianne.rodrigues.reuters.com@reuters.net))

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