Brazil is expected to announce plans for a potentially massive sovereign wealth fund this week, based on the country's coming oil wealth. One of the fund's aims, according to Guido Mantega, finance minister, will be to counter the appreciation of Brazil's currency, the real, by using the fund to put foreign currency that would otherwise have entered Brazil (pushing up the real) in an offshore account.

While there seems little doubt that Brazil is indeed sitting on enormous oil reserves, the government is engaging in wishful thinking if, as Mr Mantega says, it expects revenues to start flowing within three to five years.

In any event, by the time the fund is big enough to influence exchange rates, worries over the strength of the real may long have faded. Over the past 12 months foreign companies operating in Brazil have sent home a massive $30bn in profits and dividends, about double the amount they repatriated over the previous 12 months. The outflows are one of the main causes of Brazil's fast-growing current account deficit.

Why are they sending so much money home? One reason is that profits in Brazil are covering less lucrative operations elsewhere. But one consultant in São Paulo says his multinational clients are more concerned about the future path of the real. Many feel that it has peaked and, as Brazil enters a period of slower growth, it is set to fall. Expecting it to slip from its present level of R$1.63 to the US dollar to between R$1.70 and R$1.75 over the coming year, they are getting their money out before it loses value.

Jonathan Wheatley