UPDATE 3-Brazil current account gap widens slightly in Feb

* Brazil’s Feb current account deficit at $3.4 bln

* Country attracts $7.727 bln in FDI in February

* Brazil 12-month current account gap 2.31 pct of GDP
(Adds economist comments and details)

By Ana Nicolaci da Costa and Isabel Versiani

BRASILIA, March 25 (Reuters) – Brazil’s current account
deficit widened slightly in February as solid economic growth
led foreign companies to repatriate more profits and a strong
currency boosted demand for foreign goods and services.

Latin America’s largest economy ran a current account
deficit (BRCURA=ECI: Quote, Profile, Research) of $3.4 billion in February — its widest
ever for that month — the central bank said on Friday. The gap
was $3.3 billion in the same month of 2010.

The deficit was smaller than the $3.5 billion expected in a
Reuters survey of 13 analysts and narrower than a previously
reported $5.4 billion gap for January.

The current account, the broadest measure of a country’s
foreign transactions, indicates how reliant an economy is on
financing from foreign capital.

The transaction of goods and services in February “reflects
the dynamism of the Brazilian economy especially when compared
to important trading partners,” said Tulio Maciel, sub-head of
the central bank’s economic department, at a news conference in
Brasilia.

Expenditure with services, which includes equipment rental
and international travel, widened to $2.18 billion in February
from $2.05 billion the same month a year go.

Meanwhile, foreign companies repatriated $2.8 billion worth
of profits and dividends last month compared to $1.3 billion
the same time last year.

Such appetite comes as the economy grew a rapid 7.5 percent
last year, and a strong real has increased Brazilian purchasing
power abroad.

The widening of the deficit was limited by an improvement
in the trade balance but Maciel said that was linked mainly to
higher commodities prices.

Ha also said there was plenty of funds going around to
finance that gap.

“At the same time that we are observing these current
account deficits, the financing conditions continue to be very
favorable,” he said, referring to foreign direct investment in
Brazil.

FDI jumped to a $7.7 billion in February — a record for
that month — from $2.8 billion the same month in 2010.

The central bank also revised higher its 2011 forecast for
FDI to $55 billion from $45 billion, at the same time that it
reduced its projected portfolio investment to $15 billion from
$40 billion.

Foreigners have been taking their money out of fixed-income
since the government tripled a tax on capital inflows into
those assets in October of last year, Maciel said.

“What continues to stand out is the strong and atypical
foreign direct investment flows which can also be coming from
investors that normally invest in portfolio,” Roberto Padovani,
chief Brazil strategist at WestLB in Sao Paulo said.

While the 2011 investment projection is still short of the
$60 billion current account deficit expected by the government
for the year, authorities could become less dependent on
portfolio investment — considered more volatile — to cover
that shortfall.

The central bank reduced its projection for 2011 current
account gap to $60 billion from $64 billion.

(Additional Reporting by Leonardo Goy in Brasilia and
Luciana Lopez in Sao Paulo; Editing by Kenneth Barry)

UPDATE 3-Brazil current account gap widens slightly in Feb