Brazil’s real dropped to a level weaker than 2.4 per dollar for the first time in four months as the central bank began scaled-back support for the currency.
The real depreciated 1.6 percent to 2.4001 per U.S. dollar at 11:43 a.m. in Sao Paulo, the biggest decline among 24 emerging-market currencies tracked by Bloomberg.
Swap rates maturing in January 2016 rose nine basis points, or 0.09 percentage point, to 11.71 percent. Brazil sold $199 million of currency swaps today under a program announced Dec. 18 to auction $200 million each trading day until at least June 30.
The central bank had offered $2 billion of swaps and $1 billion in dollar credit lines weekly in 2013 after the real touched a four-year low.
“The central bank’s intervention is now lighter and should have less of an impact on the market,” Marcelo Schmitt, the fixed-income director at Sulamerica Investimentos in Sao Paulo, said in a phone interview.
The real fell 13 percent last year, the most since 2008. The U.S. dollar gained today against most emerging-market currencies as a decline in U.S. initial jobless claims added to speculation the Federal Reserve will reduce stimulus programs that tend to weaken the dollar.
The central bank on Nov. 27 increased borrowing costs by 50 basis points for the fifth straight meeting, boosting the key rate to 10 percent.
Consumer prices in the year through mid-December rose 5.85 percent. The central bank targets inflation of 4.5 percent plus or minus two percentage points.
bloomberg.com
The real depreciated 1.6 percent to 2.4001 per U.S. dollar at 11:43 a.m. in Sao Paulo, the biggest decline among 24 emerging-market currencies tracked by Bloomberg.
Swap rates maturing in January 2016 rose nine basis points, or 0.09 percentage point, to 11.71 percent. Brazil sold $199 million of currency swaps today under a program announced Dec. 18 to auction $200 million each trading day until at least June 30.
The central bank had offered $2 billion of swaps and $1 billion in dollar credit lines weekly in 2013 after the real touched a four-year low.
“The central bank’s intervention is now lighter and should have less of an impact on the market,” Marcelo Schmitt, the fixed-income director at Sulamerica Investimentos in Sao Paulo, said in a phone interview.
The real fell 13 percent last year, the most since 2008. The U.S. dollar gained today against most emerging-market currencies as a decline in U.S. initial jobless claims added to speculation the Federal Reserve will reduce stimulus programs that tend to weaken the dollar.
The central bank on Nov. 27 increased borrowing costs by 50 basis points for the fifth straight meeting, boosting the key rate to 10 percent.
Consumer prices in the year through mid-December rose 5.85 percent. The central bank targets inflation of 4.5 percent plus or minus two percentage points.
bloomberg.com
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