Arminio Fraga, who used to run the emerging markets fund at Soros Fund Management, flew to Brazil from New York to become the country's third central bank governor in three weeks. He immediately joined talks between the government and an International Monetary Fund team.
Mr Fraga, once confirmed by the senate, will replace Francisco Lopes, who devalued the Brazilian real on 13 January, the day he was appointed. The currency has since lost a third of its value against the dollar. Figures show that reserves have dwindled to $36bn, half their level six months ago. The government has halted publication of daily figures on capital flight.
The real strengthened by 10 per cent to 1.74 to the dollar at one point yesterday. Share prices in Sao Paolo fell 4 per cent as traders took profits, but later recovered ground.
The unexpected appointment drew nothing but praise. In five years to May 1998 the fund managed by Mr Fraga delivered a 184 per cent return, making it the best-performing emerging market performer.
David Lubin of HSBC Markets said: "He comes from the same intellectual mould as the people in the IMF and markets."
Mr Fraga, a Princeton-trained economist, worked at Salomon Brothers after his doctorate. He ran the international finance division of Brazil's central bank in the early 1990s before joining Mr Soros. He has recently taught at Columbia University in New York.
The Finance Ministry said the aim was to strengthen the central bank and there would be no change in policy.