Speaking at the sidelines of a conference in London, Finance Minister Guido Mantega also said Latin America's largest economy was on track for growth of around 4.5 percent this year a forecast higher than the 4.0 percent predicted by the central bank and the 3.94 percent seen by analysts.

"The government will continue to take measures to contain the overvaluation of the exchange rate.

We've taken measures on reserve requirement we can take measures on derivatives and futures.

But these are not measures we will pre-announce," Mantega told reporters in London, via a translator.

Despite aggressive measures to curb the strength of its currency, including taxes on fixed income inflows, the real is hovering at its strongest level against the dollar in 12 years.

"The problem is that monetary policy in advanced economies is too relaxed. These countries are not recovering. They have a problem of growth.

That's why money flows to emerging countries," Mantega said.

Last year, Mantega accused governments around the world of deliberately weakening their currencies to boost their export competitiveness, warning of an "international currency war".

Mantega insisted that no credit and capital market bubbles were forming despite Brazil's robust economic expansion.

"It's a hot economy but not too hot Credit is growing at a rate lower than last year, we have decelerated the economy," he said, adding that its 2011 growth rate of 4.5 percent was in line with that of other emerging economies.

"As far as inflation is concerned, the rate is decreasing. All indicators point to the deceleration of inflation. Next month, inflation will be lower because commodity prices are lower, fuel and gasoline prices are lower," he said.

Like many fast-growing emerging economies, Brazil has moved to rein in rising consumer prices. The central bank has raised interest rates four times so far this year by a cumulative 150 basis points to 12.25 percent.

But with 12-month inflation just above the government target, analysts see at least one more rate hike on the way, keeping the benchmark Selic interest rate among the world's highest interest rates in major economies.

"We have always taken measures to adjust growth to our potential.

If necessary the central bank will keep raising interest rates but that's the decision of the central bank," Mantega added.

Mantega also said that the country had achieved more than half of its primary surplus target this year and that the government's reform agenda included reducing investment taxes.

"In 2011, the fiscal result will be much better than 2010," he said, adding that the government would also undertake reforms to improve the country's economic efficiency.

"We have a tax reform agenda, to reduce tax on investments and labour requirements so that payrolls should be taxed less. We have a state tax system we have to simplify," Mantega said.

Copyright Reuters, 2011