If Aecio Neves wins the presidency this October, he would allow Brazil's currency to float freely, leaving the market to set the exchange rate in a move that would likely help local industries struggling with a strong real.
Mansueto Almeida, a top economic adviser to the Neves campaign, told the media on Thursday that a free floating real will help restore balance to Brazil's external accounts and make Brazilian manufacturers more competitive.
"If elected, a Neves government will aim to end the currency populism imposed by President Dilma Rousseff's government and return to a free floating exchange rate," Almeida said in a written statement in response to questions from Reuters.
Almeida is a member of the team of advisers led by former central bank governor Arminio Fraga that are coordinating the economic policy platform for Neves, who is Rousseff's main challenger in the Oct. 5 presidential election.
Since last August, Brazil's central bank has intervened daily in the foreign exchange market by selling currency swaps, derivatives designed to support the real. Many analysts say the central bank wants to avoid a sharp currency depreciation that would stoke already high inflation.
In June, the bank said it would extend the swap program until at least the end of this year.
The intervention program has turned the real into the best-performing major Latin America currency this year, even with some recent losses. Some of those losses came after Neves told an audience of industry leaders on July 30 that Brazil needs a weaker currency to make its economy more competitive in the global marketplace.
Industry and agribusiness leaders have called for a weaker currency to make Brazilian exports more competitive and boost investment in a flagging economy. Critics have accused the Rousseff administration of using the exchange rate as a monetary policy tool to contain inflation.
The left-leaning Rousseff remains the favorite to win a second term, though recent opinion polls point to a close race that looks almost certain to go to a second-round runoff against Neves, a centrist from the Brazilian Social Democracy Party.
Brazil's economy has underperformed since Rousseff took office in 2011 despite repeated attempts to jump-start growth through tax cuts and other costly subsidies. Industrial output is set to shrink this year and remains below pre-2009 levels, hit by stubborn inflation and high labour costs.
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Brazil's current account deficit is running at close to 4% of gross domestic product and will hit $80 billion U.S. by year end, he added.
