Monday, June 9, 2014

Brazil’s central bank announced it will extend an intervention program it launched last August to bolster the local currency.


The country’s monetary authority said the extension would begin on July 1, but did not provide information on the duration or size of the program, which it added would be communicated to the market in due time

Barclays Capital said last week that it expected the central bank to renew the program with the aim of containing local currency depreciation and thus limiting the inflationary pressures that have emerged from a weaker real.


On August 22, the bank implemented a US$60bn intervention program until December 31 in a bid to stop the depreciation of the real. Later, the program was extended until June 30 of this year.


Under the terms of the original program, the bank auctioned off US$500mn a day in currency swaps to support the real on Mondays through Thursdays, and sold US$1bn on the spot market on Fridays. As of January 2, it decreased the daily supply of swaps to US$200mn while extending the facility from four to five days.