SAO PAULO (AFP) -- Brazil said Thursday it will buy back all 6.64 billion dollars' worth of its outstanding Brady bonds, the instruments used to alleviate Latin America's debt crisis in the 1980s.

The move is the latest in a series of debt buybacks by Brazil using its swelling cash reserves, that appear to be bringing the country out of its heritage as a debtor nation, while aiming to inspire investor confidence.

Brazil's Treasury said the latest repurchase would be completed by April 15 and would be financed entirely by the country's own currency reserves, which rose to 57 billion dollars early this year.

Brady bonds, named for former U.S. Treasury secretary Nicholas Brady, were part of a plan to help key emerging-market nations get out of their debt crisis by issuing new bonds backed by U.S. Treasury securities. Brazil issued its Brady bonds in 1994. "We are closing the book on an important era of Brazil's exterior debt," said Rodrigo Azevedo, head of monetary policy for Brazil's Central Bank. "This move will increase Brazil's ability to withstand external shocks."

The move also saves the country some 345 million dollars in interest payments, according to Treasury Secretary Joaquim Levy.

The bond buyback follows a move by Brazil to pay off the remaining 15.5 billion dollars in debt to the International Monetary Fund last December, and signals the a major economic turnaround for the South American country that had been wallowing in debt for much of 1980s and 1990s.

South America's largest economy in 2002 obtained an IMF credit line of 30.4 billion dollars, the largest in the history of the fund, to avoid a massive default on its debt.

The credit line from multilateral lenders was expanded to more than 40 billion dollars in 2003 to help the economic transition sought by President Luiz Inacio Lula da Silva, a former labor union leader who has worked to win confidence of investors.

Brazil has also indicated it will pay off the remaining 2.6 billion dollars owed to the Paris Club of creditor nations.

"This is the best use of our reserves," Levy said.

Under Lula, Brazil has put into place tough measures to keep inflation in check while boosting the country's currency reserves.

Brazil posted a record trade surplus in 2005 of 44.7 billion dollars while the current account -- the overall flows of trade and capital -- showed a positive balance of 14.2 billion dollars, also a record.

With the latest repurchase, Brazil's total foreign debt will fall to about 80 billion dollars, according to Levy.

The country's bonds are now getting more attention from foreign investors, lowering the interest rate needed.

Some analysts say Brazil could join the ranks of countries with investment-grade debt, which attracts more buyers and means lower rates, in 2007 or 2008.

The latest developments are "excellent news" and "confirms the improvement of the prospects for obtaining investment-grade ratings" for Brazil, said ING's Brazilian chief economist Roberto Maciel.