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Brazil’s Lula says he doesn’t want to touch money from foreign currency reserves

SAO PAULO (Reuters) -Brazil’s presidential frontrunner Luiz Inacio Lula da Silva, who led Latin America’s largest economy from 2003 to 2010 and is now looking for a comeback, on Wednesday said he would not look to touch money from the country’s foreign exchange reserves if elected.

The so-called international reserves, currently standing at $343.5 billion, are seen as an important tool for the central bank to strengthen the local currency, and Lula’s remarks came as some of his aides advocate for a more aggressive foreign exchange policy.

Reuters reported last week that economic advisors to Lula were drafting a plan that would include more market interventions.

One of his top aides, Pedro Rossi, said the central bank was failing to make full use of its instruments, including currency swaps, to correct periods of excessive currency devaluation. He added that Lula could embrace more regulatory tools.

Lula in an interview with news website UOL on Wednesday also said that Brazil would not need a spending ceiling if he were to win a new term.

“I don’t need a spending cap. A spending cap legislation is something you do when you are irresponsible,” the leftist leader said. “I know I cannot spend more than I have”.

Lula leads incumbent right-wing President Jair Bolsonaro in opinion polls ahead of the Oct. 2 election.

(Reporting by Eduardo Simoes; Writing by Gabriel Araujo; Editing by Anthony Esposito and Mark Porter)

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