Abstract
ABSTRACT Brazil was one of the emerging countries that had a stronger trend of currency appreciation from the 2nd quarter of 2009 to July 2011. Under this context that can be understood the implementation of capital account regulation (CAR) after 2009, which was complemented with another kind of regulation, the so-called FX Derivatives Regulation (FXDR). This paper shows that only when Brazilian government adopted these two kinds of regulations simultaneously, the policy effectiveness increased in terms of protecting the Brazilian currency from upward pressures. Brazilian experience also highlights that it is not possible to establish a hierarchy between temporary instruments to manage capital flows and permanent prudential measures, as supported by the IMF current approach.
Highlights
A new wave of capital flows to emerging economies, boosted by the post-crisis circumstances, took place from the 2nd quarter of 2009 to the first quarter of 2013
In May 2013, when the Federal Reserve (Fed) merely indicated that it might begin tapering this policy toward the end of the calendar year, global investors set into motion a portfolio adjustment that caused a temporary but significant reversal in capital flows to U.S, putting upward pressures on the exchange rates of many emerging economies (BIS, 2014)
In order to deal with these policy dilemmas, some of these countries resorted to capital account regulation (CAR), which encompasses capital controls and financial prudential regulation (Gallagher et al, 2012)
Summary
Resumo: O Brasil foi um dos países emergentes que enfrentou fortes pressões de apreciação cambial entre o 2o trimestre de 2009 e julho de 2011. É sob este contexto que pode ser entendida a aplicação da Regulação da Conta Capital (CAR) depois de 2009, que foi complementada com outro tipo de regulação, a Regulação dos Derivativos Cambiais (FXDR). Palavras-chave: liberalização da conta de capital; controles de capitais; economia brasileira. Abstract: Brazil was one of the emerging countries that had a stronger trend of currency appreciation from the 2nd quarter of 2009 to July 2011. Under this context that can be understood the implementation of capital account regulation (CAR) after 2009, which was complemented with another kind of regulation, the so-called FX Derivatives Regulation (FXDR).
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