Brazil central bank mulls measures to modernize foreign exchange trading
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))
ANALYSIS-Argentina standoff sharpens Brazil central bank debate
By Ana Nicolaci da Costa
BRASILIA, Jan 19 (Reuters) – A standoff between Argentina’s government and central bank has sharpened debate in neighboring Brazil over the need for Congress to pass a bill making the country’s central bank formally independent.
Brazil’s central bank has no legal autonomy but in practice decides monetary policy broadly without political interference. That has allowed its president Henrique Meirelles to pursue conservative monetary policy and keep inflation within a target range for six years. Such policy has earned him world-wide plaudits for his role in Brazil’s economic stability.
But the bank’s autonomy is still subject to political consent and President Luiz Inacio Lula da Silva’s willingness to support Meirelles.
Brazilian central bank presidents are appointed by the president of Brazil, who also legally nominates central bank directors which then have to be approved by the Senate.
Uncertainty over whether future governments will continue backing central bank officials raises doubts over monetary policy and could add to market volatility ahead of national elections in October, in which Lula is legally barred from standing.
The politically-sensitive bill, under consideration since 2007, is unlikely to pass in 2010 or even next year, said Cristiano Noronha, a political analyst at Arko Advice.
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