Brazil’s central bank announced it will sell dollars in the spot market for a second day to support the real amid a rout in global assets.
After sold about $3.5 billion in two auctions on March 10th, the first such intervention this year, Policy makers decided to offer up to $2 billion in a spot auction on the next day.
The central bank had been stepping into the foreign exchange markets only via swap auctions, of which it sold $9.5 billion in February in a bid to contain the volatility.
The change comes as the collapse in global markets triggered by a selloff in crude added pressure to the real, which was already the world’s worst currency. The real is down 15% this year as record low rates diminish its carry appeal and as disappointing economic data casts doubt on Brazil’s recovery.
On the morning of March 9th, the central bank pledged to continue intervening in the foreign exchange market with all instruments available and for as long as needed. The bank’s Monetary Policy Director Bruno Serra refrained from announcing a program to systematically sell dollars from Brazil’s foreign reserves, but said this doesn’t mean the central bank is stepping out of the market any time soon.
Original Story: Bloomberg |Luisa Leite
Photo: Site Banco Central do Brasil
Edition: Prime Yield