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UPDATE 1-Brazil says not worried about strong dollar as rate cuts intensify
January 18, 2017 / 1:37 PM / 10 months ago

UPDATE 1-Brazil says not worried about strong dollar as rate cuts intensify

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DAVOS, Jan 18 (Reuters) - Brazil is not concerned about a strong dollar as prospects of an economic recovery and higher commodity prices have helped support the local currency, Finance Minister Henrique Meirelles and central bank governor Ilan Goldfajn said on Wednesday.

Goldfajn, at a press conference at the World Economic Forum in Davos, also reiterated the bank’s guidance on interest rates by saying the bank has entered a new phase of 75-basis-point cuts per meeting. Goldfajn said that pace could be revised depending on inflation expectations and the level of economic activity.

The Brazilian real has gained around 1 percent so far this year, trading near its highest since November. A stronger currency helps the central bank reduce inflation, which in turn paves the way for lower interest rates.

“Commodity prices are strong, which for us could limit the strong dollar effect,” Goldfajn said. “The pace of 75 bps (per meeting) is our new pace but at some point it may change,” he added, in a reference to interest rates.

The government will announce its new 2017 economic growth forecast within 10 days, Meirelles, also in Davos, added. He said the economy should start recovering from recession this year and that many Davos attendees have shown interest in investing in Brazil. (Reporting by Sujata Rao; Writing by Silvio Cascione; Editing by Chizu Nomiyama and Jeffrey Benkoe)

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