The finance ministry removed the
president of Brazil's Central Bank today, less than a month after
he was named to the post.
|Lopes' replacement used to work for international financier George Soros
Francisco Lopes will be replaced by Arminio Fraga, who has a
doctorate from Princeton University and was called "one of
Brazil's best economists" in a news conference today by Finance
Minister Pedro Malan.
The Finance Ministry said the government decided to overhaul the
central bank to strengthen the institution following the recent
shift in Brazil's foreign exchange policy.
Last month, the central bank formally adopted a policy allowing
the local currency, the real, to float freely against the dollar.
Since restrictions were lifted on Brazil's foreign exchange
trading, the real has depreciated 32 percent against the dollar.
The real weakened further today on news of the change at the
Central Bank but stabilized in later trading.
"The reorganization of the central bank board of directors
represents no change in the free-float forex policy, nor in the
general direction of the government's economic policy, which will
be maintained with determination," the Finance Ministry said in a
Malan said that both he and Lopes had offered to step down amid
the economic turmoil facing the country, but that President
Fernando Henrique Cardoso wouldn't accept the finance minister's
The ministry statement made it clear that Fraga, who worked for
the Soros Foundation run by international financier George Soros,
is no longer associated with Soros.
Malan said that Fraga's views don't necessarily correspond with
those of Soros, who has been a sharp critic in recent days of
Brazil's decision to maintain high interest rates.
Until Fraga is confirmed, Demosthenes Madureira de Pinho of the
central bank will serve as interim president.
Currency dealers said today the market was relatively calm,
awaiting further details of the changes, as well as developments on
the talks between the International Monetary Fund and the economic
team, led by Malan, in Brasilia.
Brazil, which has Latin America's largest economy, has been in
talks with the IMF over the release of the second installment of a
$41.5 billion international aid package.
In December, Brazil received $9 billion from the IMF and used it
to bolster its sagging currency reserves, now at $36 billion down
from $74 billion last July. A second parcel might help restore the
confidence of skittish investors.