832.5151/1027: Telegram
The Ambassador in Brazil (Caffery) to the Secretary of State
[Received March 5—12:55 p.m.]
46. My 41, February 26, noon.11 The Director of Exchange12 informs me that the Bank of Brazil will allocate exchange today for maturities through February 19th. He states furthermore that exchange contracts have been granted for daily quotas of oil companies and flour mills through February 9th. Firms operating on open account have received exchange contracts for their daily quotas through January 31st.
The Director of Exchange informs me that due to difficult exchange situation he has notified the oil companies that he can give them no assurance when further exchange contracts will be granted for imports of oil which does not come from the United States.
Aranha13 informs me that the Government is considering a plan under which the Government will retain 20% of available foreign [Page 337] exchange and release 80% for the free market. It is known that other plans for modification exchange control are under consideration although nothing has been definitely decided. The exchange situation of the Bank of Brazil is not improving as rapidly as was expected due to the decline in offerings of negotiable export bills to the Bank. The circulation of the above reports in business circles is having a depressing effect on import trade as the impression is gaining ground that the milreis will depreciate still further in the near future and that some restrictions will be placed upon imports.
In connection with the above it is important to note that the preference trade statistics just made available show that Brazil’s favorable balance of trade decreased from $73,325,753 in 1936 to $17,010,581 in 1937.
Please inform Department of Commerce.