Brazil to launch $60bn currency programme

Brazil to launch $60bn currency programme
Published: 23 August 2013
SAO PAULO - Brazil's central bank said it will launch a currency intervention programme worth about $60bn to ensure liquidity and reduce volatility in the nation's foreign exchange market. The programme, which will be conducted through currency swap and repurchase agreements, follows a more than 15 per cent depreciation in the real against the dollar this year to its weakest levels in more than four years.

"With the objective of providing currency hedging to economic agents and liquidity to the currency market, the central bank of Brazil will start, from this Friday . . . a programme of currency swap auctions and the sale of dollar repurchase agreements,” the central bank said late Thursday.

The move to reassure markets comes as central bank president Alexandre Tombini cancelled a trip to Jackson Hole in the US for the annual international meeting of the world's top monetary policy officials so that he could monitor the real.

While initially welcomed by the Brazilian government, the real's rapid depreciation against the dollar has started to make policy makers nervous given the danger that it could add to already resilient inflation.

Luciano Coutinho, president of Brazil's development bank, BNDES, the country's main long-term lender, said on Thursday the currency's fair value was probably between R$2.20 and R$2.35 to the dollar - on Thursday morning it touched highs of over R$2.45 and was trading at about R$2.44 in the late afternoon.
- FT
Tags: Brazil,


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