Aurelia Butler

BRASILIA (Reuters) – Brazil’s Economy Ministry is studying a target for the country’s substantial foreign exchange reserves, two sources told Reuters, as inflation remains the top concern of voters ahead of a presidential election.The plan would set a target with a minimum and maximum amount of foreign currency Brazil should keep in its reserves, which currently totals $338.7 billion. The plan for the floating bands is preliminary and subject to change or the government could decide not to pursue the idea, the officials said, requesting anonymity due to its sensitive nature. The Economy Ministry and the central bank declined to comment.Foreign reserve sales by the central bank help to contain the dollar’s rise against the Brazilian real, easing inflationary pressures. The central bank, which is autonomous from the federal government, has said that it only operates in the foreign exchange market when it identifies sharp volatility. Spiking consumer prices are a major topic in Brazil ahead of the October elections, with President Jair Bolsonaro trailing leftist former President Luiz Inacio Lula da Silva in polls.The target was first reported on Tuesday by the newspaper O Globo.A target with floating bands would avoid political manipulation of the reserves, especially in an election year, one official said.This would directly interfere with the exchange rate policy that is entirely the responsibility of the central bank.The existence of such a plan surprised top-level technicians at the Economy Ministry, who said there was no agreement on a target for reserves. A central bank source criticized the idea, saying the exchange rate was “an external variable, you have no control over it.””It’s stupid,” said Alexandre Schwartsman, a former central bank director. He said the currency reflects economic fundamentals and it makes no sense to control its fluctuation.Lula has said he will not touch the country’s foreign exchange reserves if elected. More

BUENOS AIRES (Reuters) – Argentina’s monthly inflation blew past forecasts at 7% in August and soared to nearly 80% from a year earlier, a government agency reported on Wednesday, despite efforts by officials and central bankers to curb spiraling prices.The month-on-month inflation reading, reported by the INDEC statistics agency, was cooler than the 7.4% in July but above the 6.6% median analyst forecast in a Reuters poll.The South American country, a major grains producer, has one of the world’s highest inflation rates. The situation has been aggravated by rising global food and fuel costs and has dented the popularity of President Alberto Fernandez’s center-left government ahead of elections next year.The government has pushed retailers to freeze some prices, with some supermarkets rationing purchases of staples like flour, sugar and milk in a bid to control prices. Shopping costs have nonetheless soared.”From one week to the next, you seem to spend twice as much,” Graciela Negretti, a 67-year-old retiree in Buenos Aires, told Reuters.”Yesterday I went to the supermarket and I came home just sickened. I told my children that things surely could not increase this much in just a few days.”Inflation in the 12 months through August hit 78.5%, while prices were up 56.4% in the first eight months of the year. A central bank poll recently forecast that Argentina would end the year with an inflation rate of 95%, while some private analysts predict it will hit 100%.Lucia Estevez, 38, an interior designer, told Reuters that many people were not making it to the end of the month as inflation devalued their salaries, forcing people to cut out small luxuries they had enjoyed.”You’re always trying to just stay afloat,” she said. “You never have anything spare to be able to treat yourself.” More