Yet another alternative was a variation on the Resolution 63 loan. In this type of financing, the Circular 767 of the Central Bank of Brazil allowed the lending bank to charge a fixed rate for the expected devaluation of the cruzeiro against the U.S. dollar as a part of the loan's cost. In practice this meant that the bank would charge a sort of "currency premium" in addition to monetary correction. Because the bank would substitute a fixed charge for the actual devaluation of the cruzeiro over the term of the loan, the foreign exchange risk was shifted away from the borrower towards the lending bank. Furthermore, reflecting the aggressive Brazilian foreign exchange policy of devaluating the cruzeiro at the same rate as inflation, which made unnecessary a one-shot maxidevaluation, the effective cost, including the premium, over monetary correction was as low as 20 percent per annum, compared with common cruzeiro denominated loans costing 35.3 percent per annum over monetary correction.
However, this window might not continue to be open for long because banks were getting increasingly concerned about the government policy toward inflation, devaluation, and monetary correction after the January 1985 presidential election. To use it, the firm would have to move quickly.
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