632.6231/311: Telegram

The Ambassador in Brazil (Caffery) to the Secretary of State

114. Embassy’s No. 28, February 2, 6 p.m. The Director of Exchange informs me that the Bank of Brazil today is changing the selling rate for compensation marks to 14.85 to the pound as contrasted with the ratio of 15 to the pound which had been in effect since February 3.

Today’s selling rate for compensation marks is milreis 5.880 as against yesterday’s rate of milreis 5.825. The Bank of Brazil’s new buying rate is 150 reis under the selling rate as compared to 100 reis previously. These changes will of course improve our competitive position with Germany in this market.

I am informed that the German Embassy and the German banks in particular are indignant at the further centralization of compensation mark operations in the Bank of Brazil. The German banks, by that action, are now prevented from making the large profits on exchange transactions which they formerly enjoyed.

Please inform Department of Commerce.