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February 10, 2011

US: Brazilian currency worries Chrysler/Fiat chief

Chrysler Group is closely tracking currency exchange rates in Brazil, where the increasing strength of the Brazilian real has put pressure on its growth plans in the region, CEO Sergio Marchionne said.

Chrysler Group is closely tracking currency exchange rates in Brazil, where the increasing strength of the Brazilian real has put pressure on its growth plans in the region, CEO Sergio Marchionne said.

“It’s making things there quite costly,” Marchionne told the Wall Street Journal on the sidelines of the Chicago show.

Brazilian officials have been fretting publicly about the strength of the real since September. Since 2009, the real has gained more than 30% against the US dollar. The increase undermines exports by making them more expensive and raises the cost for foreign companies doing business in Brazil.

Current trends, however, remain too short-term in nature to make any major business decisions, such as shifting procurement or adopting new policies on foreign exchange, Marchionne said.

“Any knee-jerk reaction to currency moves can force a readjustment and that can be quite expensive,” Marchionne said. “For Chrysler, it is a great thing to the extent that other currencies have experienced a strong position relative to the US dollar.”

For European operations, “it’s a bind,” he said.

Fiat has significant sales in Brazil and is working to help Chrysler expand its business there and other markets.

As part of the alliance, Fiat is supposed to help Chrysler expand its sales in the rest of the world.

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