Foreign exchange is an exchange operation of currency from one country for the currency of another country. For example, when a Brazilian tourist travels to other country and needs foreign currency, the agent authorized Central Bank who operates in the exchange market receives from the Brazilian tourist the national currency and delivers him the foreign currency. On the other hand, when a foreign tourist wants to convert foreign currency into reals, the authorized agent purchases the foreign currency from the foreign tourist, delivering him the corresponding amount in reals.

In Brazil, the exchange market is the abstract environment where the agents, authorized Central bank, carry through the operations of exchange among themselves (banks, public saving banks, brokers, deliverers, travel agencies and lodging agents), as well as between these and their customers.

The exchange market is regulated and inspected by the Central Bank of Brazil. It includes foreign currency buying and selling operations, operations in national currency between residents or owners of headquarters in the Country and residents or owners of headquarters in foreign countries and the operations dealing with gold as exchange instrument, accomplished through intermediary institutions authorized by the Central Bank of Brazil to operate in the exchange market. Outside laws´ frontiers, there is a segment called black market. The businesses carried through within the black market are illegal, as well as the ownership of foreign currency derived from illicit activities.

Any natural person or legal entity can get in touch with an institution authorized to operate in the exchange market in order to buy or to sell foreign currency. As a rule, it is necessary documentary endorsement for the accomplishment of the exchange operations.

The Information System of the Central Bank (Sisbacen) is an electronic system of collection, storage and exchange of information, which connects the Central Bank of Brazil to the agents of the national financial system. All exchange operations carried through in the country need to be registered in the Sisbacen by the authorized agent, allowing the Central Bank to monitor all the operations.

The institutions allowed to operate in the exchange market are banks, credit, financing and investment societies, brokers, deliverers, travel agencies and lodging agents authorized by the Central Bank. These agents can carry through the following operations:

a) banks, except development banks: all the operations related to the exchange market;
b) development banks and public saving banks: authorized to perform specific operations;
c) credit, financing and investment societies, broker or securities societies and securities deliverer societies:

c1.) purchases or sales of foreign currency in checks entailed to unilateral transfers;
c2.) purchases or sales of foreign currency in cash, and traveler’s cheques to be used in international trips;
c3.) export and import simplified exchange;
c4.) purchase and sale operations of financial nature, not subject or tied to register in the Brazilian Central Bank, up to US$ 10.000,00 (ten thousand American dollars) or its equivalent in other currencies;
c5.) operations in the interbank market, arbitrages in the Country and, through a bank authorized to operate in the Exchange Market, foreign arbitrages;
d) travel agencies: purchases or sales of foreign currency in cash, and traveler’s cheques to be used in international trips;
e) tourism lodging agents: exclusively purchase of foreign currency in cash for foreign residents, cheques and traveler’s cheques related to tourism in the Country.

The Brazilian Company of Post offices and Telegraphs (ECT) is also authorized by the Central Bank of Brazil to carry through operations with sent or received international money orders, related to such commitments:

• maintenance of individuals;
• contributions to associative and retire entities;
• acquisition of computer programs for personal use;
• retirements and pensions;
• acquisition of medicines not destined to commercialization;
• diverse commitments, such as vehicles rentals, traffic fines, reserves in hotels, expenditures with communications, newspaper and magazines subscriptions, other random expenses, as well as payment for books, periodicals, magazines and publications, when the import is not subject to register in the Siscomex;
• payment for services of repair and overhauling of machines and parts;
• donations;
• receiving of Brazilian exports under the systematic of non-simultaneous exports simplified exchange, up to the limit of US$ 20.000 each operation (only for received orders);
• payment of Brazilian exports under the systematic of imports simplified exchange, up to the limit of US$ 20.000 or its equivalent in other currencies, each operation (only for sent orders);

The agents which are authorized to operate in the exchange market are listed in link >> Exchange and foreign capital  >> Institutions that act in the exchange market. Alternatively, or the Central offices of Attendance of the Central banking or the agent itself may be required to present the evidential documentation of the authorization conveyed by the Central Bank.

As a general rule, any payments or receipts in foreign currency can be carried through in the exchange market, including transferences for constitution of funds in the foreign location and its return to the Country and applications in the financial market. Individual as well as companies can buy and sell foreign currency or perform international transferences in Reals of any nature, without limitation of value, once the legality of the transaction is observed, and based on the economic fundamentals and the responsibilities defined in the respective documentation.

Although from the financial exchange point of view there are no restrictions for the movement of resources, the market agents and their customers must observe eventual existing legal or prescribed restrictions for determined types of operation. As an example, as a proper regulation of the insurance segment, only the insurances authorized by the Susep can be placed in foreign locations or be paid  in foreign currency.

Foreign investment in the derivative and stock markets carried through by individuals or juristic persons are allowed, once observed the legality of the transaction, including what relates to taxing.

This possibility is not applied to the financial transfers of concern of institutions authorized to act by the Brazilian Central Bank, as well as funds of any nature which must observe specific disposals of the National Monetary Council and, in accordance to the their respective areas, specific regulation determined by the Brazilian Central Bank and the Securities and Exchange Commission.

The primary market operation implies in effective entry or exit of foreign currency of the Country. This is the case of the operations carried through with exports and imports traders, travelers etc. In the secondary market, also called interbank market, the foreign currency is negotiated among institutions that are part of the financial system, and it simply migrates from the assets of one institution to another´s.

The exchange contract is the document that legalizes the exchange operation. It holds information related to the foreign currency the person is buying or selling, the contracted rate, the corresponding value in national currency and the names of the purchaser and the seller.

The exchange contracts must be registered in the Sisbacen by the agent authorized to operate in the market.

In the operations of purchase or sale of foreign currency up to 3,000.00 US$, or its equivalent in other foreign currencies, the use of the exchange contract is not an obligation, but the agent of the exchange market must identify its customer and register the operation in the Sisbacen.

Foreign exchange policy is the set of actions of the Government that influence in the behavior of the exchange market and exchange rate.

The Central Bank of Brazil executes the foreign exchange policy defined by the National
Monetary Council. In order to have it done, it regulates the exchange market and authorizes the institutions that act in it.

the Central Bank of Brazil also is responsible for inspecting the market, and it may punish controllers and institutions, by means of fines, suspensions and other sanctions determined by law. Moreover, the Central Bank of Brazil can directly act in the market, buying and selling foreign currency in occasional and limited way, withholding the objective to contain disordered movements of the exchange rate.

Data and notes on the foreign sector of Brazilian economy are available in the address http://www.bcb.gov.br/?ECONOMIA, through of bulletins of the Brazilian Central Bank and economic-financial notes for the press, divulged by the Economic Department (Depec).

The regulation for the exchange market is contained in the "Regulation of the Exchange and International Capital Market” (RMCCI), available in the address http://www.bcb.gov.br/?RMCCI. The subscription of the printed version of the RMCCI can be made through guidelines shown in the page http://www.bcb.gov.br/?ASSINAIMP.

the exchange rate is the price of a foreign currency measured in units or fractions (cents) of the national currency. In Brazil, the most negotiated foreign currency is the dollar of the United States, what means that the quotation usually used is this currency´s. So when we say that, for instance, that the exchange rate is 2,40, it means that one American dollar costs R$ 2,40.

The exchange rate reflects, thus, the cost of one currency in relation to the other, and there are also a sale rate and a purchase rate, which referred to depending on the point of view of the authorized agent to operate by the Central Bank of Brazil.

The Exchange rates commonly used in the Brazilian exchange market are freely negotiated among their agents and their clients and are broadly divulged by the press.

No. The exchange rates are freely agreed between the contracting parties, what means, between this person and the authorized institution or between the authorized agents. The Central Bank of Brazil divulges the average tax practiced in the interbank market, known in the market as "PTAX rate".

No. The majority of exchange operations are settled through the emission of the draft. However, operations related to international trips or to the purchase of currency for acquisition of medicines can be settled in cash. Normally, the banks, for questions of security and teller administration, operate with the possible minimum of currency in cash, preferring to negotiate with traveler’s cheques.

The exchange rates are freely agreed between the parts, and may be different in accordance with the means of delivery of the foreign currency.

The foreign exchange norms do not impose limits for this purpose, being responsibility of the financial institution to zeal for the legality of the operation, particularly in what relates to the identification of the customer and the origin of the national currency used in the payment.

There is no specific mention of regulation for such situations. We remind you, however, that the use of foreign currency as means of payment or as value savings in Brazil is forbidden. Moreover, the fiscal legislation demands the declaration of eventual values in foreign currency.

From August of 2006, it was allowed to the Brazilian exporter of merchandises and services to keep 30% of his exports´ receipts in the foreign location. Until then, law obliged these exporters to bring to Brazil the total amount of their receipts of exports.

Although he is obliged to prove the ingression in Brazil of, at the very least, 70% of its receipts, nothing hinders the Brazilian exporter to send these same resources again to the foreign country and there keep his resources in foreign currency.

As a way to reduce the financial costs of the exporter with these operations, also in August of 2006, the Central Bank of Brazil regulated the system of simultaneous simplified exchange, by means of which the evidence of ingression of exportation receipts in the country is done through the export exchange simplified contract settlement, with simultaneous settlement of the financial transference simplified contract for the constitution of foreign resources, once observed the following particularities:

• from data informed in the Sisbacen an exports exchange contract and, as a simultaneous counterpart, a financial contract of exportation are automatically generated, having both the same date, value, based on the same institution, so resulting in the constitution of foreign resources;
• the exchange rate is the same in both exchange contracts;
• the exchange contracts are automatically settled when generated;
• the value in Reals must be accounted as debit and credit in the trader´s account;
• there are no emissions of drafts for foreign or domestic payments.

These operations are not limited in their value when lead in banks authorized to operate in the exchange market, being limited to US$ 20.000 in operations carried through by credit, financing and investment societies; exchange and securities brokers and securities brokers; all them authorized to operate in the exchange market.

It is an exchange contract with reduced amount of information required to the customer. The information register demanded by , the Central Bank of Brazil is much simpler - instead of 26 items to be informed in an traditional exports operation, this system requires only: the CNPJ or CPF of the exporter, the value in national currency, the value in foreign currency, the form of the delivery of the foreign currency and the foreign payer.

When carried through in banks authorized to operate in foreign exchange, such operations do not have value limit. When lead by credit, financing and investment societies, exchange or securities brokers, being them authorized to operate in the exchange market, they are limited to US$ 20.000,00, not being allowed the negotiation of partial values or balance from merchandises or services foreign sales originally negotiated in a higher value to the related limit.

Advancing on Exchange Contract (ACC) is an anticipation in national currency that the exporter has access to, in the act of the exchange contract, when this contract precedes the shipment. What makes the ACC different from the Advancing on Delivered Exchanges (ACE) is that, through the first one, the exporter receives the national currency before boarding the merchandise, serving as financial support to the production of the merchandise; and in the second case, the national currency is delivered after the shipment of the merchandise, representing, in a practical way, the payment for the exportation in advance.

Yes. The Central Bank of Brazil, when creating the non-simultaneous simplified exchange system, allowed the exports trader to receive the payment from its foreign sales through international credit card. In this case, the trader does not carry through the exchange contracting, which is a responsibility of the card administrator company.

In accordance with the regulation of the exchange market, instructions for foreign payment or credit to third parties are forbidden. The exceptions are the cases of:

• exports lead by foreign intermediary, which individual value being up to US$ 10.000,00;
• commission for an agent and parcels of other natures due to foreign residents and foreseen in the Siscomex´s register of exportation.

Yes. The payment of Brazilian imports can be accomplished through the simplified exchange system. The exchange operations carried through this system are limited, under contract, to US$ 20.000,00 when lead by credit, financing and investment societies, exchange or securities brokers, being them authorized to operate in the exchange market, not being due to limits of value when lead in banks authorized to operate in the exchange market.

In the operations above of US$ 20.000,00, the bank must inform the name of the foreign beneficiary in the Sisbacen.

For operations of up to US$ 20.000,00, there is no restriction on this type of payment.

The Brazilian regulation does not reach foreign locations, thus not being possible, consequently, the existence of a norm edited in the Country regulating the subject. Based on Decree 1,060, of 1969, and in provisional executive order 2,224, of 2001, the individuals and juristic persons, resident or with headquarters in the Country, and thus appraised in the tax legislation, are obliged to inform to the Brazilian Central Bank, annually, the assets kept in foreign countries. Finally, attention should be paid to the fact that the foreign exchange regulation considers the remittance of foreign currency for constitution of foreign resources.

From August 2006 on, it was allowed to the Brazilian merchandise and service exporters to directly receive receipts from its exports crediting their foreign accounts.

There is no legal or regulatory impediment to individuals or companies, residents or with headquarters in foreign countries, to be owner of an account in national currency, in an agency from a bank authorized to operate in the exchange market.

The transactions which may occur in such accounts characterize ingressions or exits of resources in Brazil and, when having a value of or superior than R$ 10.000,00, are subjected to specific procedures such as obligatory identification of the origin and destination of the resources, of the nature of the payments and the identity of the depositors and the beneficiaries of the effected transfers, as well as of documentary evidence and register in the Central Bank System.