832.5151/1443: Telegram
The Ambassador in Brazil (Caffery) to the Secretary of State
[Received September 9—2:50 p.m.]
317. The expected switch in orders to the United States is very noticeable. The principal obstacle is the exchange of cash in the United States before shipment. This is further complicated by Brazilian exchange regulations.
In view of the number of appeals received by the Embassy from Brazilian importers, the Embassy today discussed this matter with the Director of Exchange and obtained an important concession.
Although the banks are permitted to open credits abroad (my telegram number 251 of August 17, 193966) they are reluctant to do so because the Bank of Brazil is not guaranteeing the delivery of future exchange. The Director of Exchange now assures me that the bank will close future exchange for credits opened in the United States for the purchase of essential products. This action will facilitate purchases of steel products, chemicals, pulp, et cetera formerly imported from European countries. Each case will be decided upon its own merits.
[Page 401]The bank has also resumed the sale of future exchange for payment of merchandise cleared through Brazilian customhouses.
The exchange balance of the bank now approximates $7,200,000. The bank continues to fix the buying and selling rates for dollars at milreis 19.830 and milreis 19.980 respectively. Exchange operations are normal.
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