SPEED-Notes-2011-002 Foreign Exchange Regulations

This Note is an update of SPEED/Notes/2011/001 taking into account the final version of the Regulamento da Lei Cambial (Regulation of the Foreign Exchange Law) published in the government’s gazette (Boletim da República) at the end March 2011. It concentrates on a description of the main rules set by the regulamento: (i) repatriation and 50 percent obligatory conversion of export earnings; and (ii) establishment of a 90 day deadline for the 50 percent conversion. These two main rules are not considered to have any major negative impact on the economy and, in particular, on export-oriented companies. The Note says that though implementation is the responsibility of the exporting companies, most of the administrative burden will fall on commercial banks. Further, compliance cost on the part of the banks will increase bank costs with the likely result that banks will pass these costs on to clients through higher fees.