Futures Market News
Real will be cushioned against impact of QE3, finance minister says
Oct 10, 2012 04:47 PM
The Brazilian real will maintain its strong presence on forex markets while the U.S. implements its third round of asset purchasing, the South American country's finance minister told Bloomberg on Wednesday.
The monetary unit of Latin America's largest economy will not gain value as much as it did during the third round of quantitative easing as compared to the two rounds prior, Guido Mantega said during an interview in Tokyo at meetings of the World Bank and the International Monetary Fund. The gains previously achieved by the real were attributable to a financial transaction tax and Brazil's record low interest rates.
"The policy has two legs," the finance minister told the news source, noting the nation he serves would prefer that the U.S. spur economic growth via fiscal spending programs rather than monetary easing. "The monetary leg is very long, and the fiscal leg is short, so they move with a limp."
The value of the real has dropped 0.9 percent since U.S. Federal Reserve Chairman Ben Bernanke announced QE3 on September 13.
Policy makers with Brazil's central bank gathered for two days of meetings that were set to close on Wednesday, according to The Wall Street Journal. The officials were expected to review policy regarding interest rates.
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