Brazil central bank to intervene in FX market again on Thursday

Credit: REUTERS/PILAR OLIVARES

Brazil's central bank announced it will sell dollars on the spot market on Thursday, effectively its fourth bout of currency market intervention this week as the real has slumped to all-time lows.

By Jose Gomes Neto and Jamie McGeever

BRASILIA, Nov 27 (Reuters) - Brazil's central bank announced it will sell dollars on the spot market on Thursday, effectively its fourth bout of currency market intervention this week as the real has slumped to all-time lows.

The central bank will auction up to $1 billion in the spot market on Thursday, after the real BRBY finished trading at a record-low close of 4.26 per U.S. dollar on Wednesday. The bank this week already intervened once on Wednesday and twice on Tuesday, when the dollar reached a historic intraday low of nearly 4.28 reais.

The sale on Wednesday helped push the dollar back down to 4.2460 reais, but within 30 minutes of the auction it was already back up above 4.26 reais.

Central bank President Roberto Campos Neto on Tuesday evening said the bank had intervened in the market to fill liquidity gaps and because the market had become dysfunctional.

The central bank shifted its foreign exchange policy in August, when it sold dollars on the spot market without using additional instruments or a commitment to repurchase for the first time in a decade.

A senior Economy Ministry official told Reuters on Wednesday that the government's fiscal discipline and the central bank's market expertise means there is little cause for concern.

"I'm relaxed about these movements," said Special Secretary Waldery Rodrigues, Economy Minister Paulo Guedes' right-hand man.

(Reporting by Jose Gomes Neto and Jamie McGeever Editing by Chizu Nomiyama and Leslie Adler)

((jake.spring@thomsonreuters.com; +55 61 99653-2429; Reuters Messaging: jake.spring.thomsonreuters.com@reuters.net / Twitter: https://twitter.com/jakespring))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More