5:04 pm ET May 7, 2014

The Brazilian central bank may be about to change its currency policy widely credited with stabilizing the exchange rate during last year’s turmoil in emerging markets, according to market observers.

Since October 2013 the bank has been holding pre-announced auctions of futures contracts to provide a way out for investors in case their bets on the Brazilian real went sour.

The idea was to offer predictable hedge options, so investors would be less afraid of holding the local currency at a time when the Federal Reserve was mulling a wind down of the bond-buying policy that beefed up emerging-market currencies for years.

The Brazilian idea worked. After falling to 2.45 reais per dollar, the currency strengthened to the 2.30 per dollar level, and in December the bank extended the program until June. As the currency-swap contracts came due, the bank rolled them over.

But now, with the currency just above 2.20 per dollar, there have been signs of change. The pace of the rollovers is declining. The central bank hasn’t said why, but many analysts believe the central bank is adjusting the rollovers to manage the currency’s value.

The program was launched to tame volatility, but market participants have always suspected it was also aimed at preventing the real from weakening too much and fueling higher inflation. Now, they think the central bank may be trying to keep the real from climbing too high and curbing exports, among other things.

A central bank spokesman declined to comment.

“The rollovers are diminishing and at the current pace they will rollover only half of contracts due in June,” said analyst Paulo Nepomuceno, from brokerage firm Coinvalores. He said there are 195,000 contracts expiring at the end of May, but only 100,000 will be renewed if the bank doesn’t speed up – which is still a possibility. “The central bank could increase the pace tomorrow,” Mr. Nepomuceno said.

Since April 2013 the Brazilian monetary authority has increased interest rates to keep tame inflation. It has barely succeeded, with annual inflation expected to close 2014 just under 6.5%, the upper limit for the government’s target range. The official target for inflation is 4.5%, plus or minus two percentage points.

With interest rates already up to 11% from 7.25% early last year, any source of price pressure is undesirable, analysts say, and a weakened real could make imports more expensive. On the other hand, too strong a currency could make Brazilian exports less competitive in global markets. Brazil has been running a trade deficit and needs to be careful not to lose control, analysts say.

The swap contracts could help the bank get the exchange rate just right.

“Fine-tuning the rollover amount of maturing swap is now an important tool the BCB can use to manage the impact on the real,” Nomura’s economist Tony Volpon wrote in a report Tuesday.

Brazil’s well developed futures market means that future contracts can be traded into spot dollars relatively easily. The central bank is exploring this tool to avoid tapping its foreign-currency reserves of over $370 billion. The reserves work as a buffer to curb any potential speculative attack against the real.

That, combined with attractive interest rates, has caused the real to be one of the strongest performers amongst emerging-market currencies this year. It is up around 5.5% versus the dollar, while the Indian rupee is up around 2.5%, for instance.

The exchange-rate impact on Brazilian inflation, meanwhile, may be less of a concern this year. “Nobody imagines the real falling 15%” as it did in 2013, Mr. Nepomuceno said. “It is more likely to fall around 6%,” close to inflation levels, he said.

With interest rates high, foreign investors can invest in the real to pocket returns higher than in developed economies, a situation that’s unlikely to change for the time being. “Flows towards emerging economies will continue for at least one year,” Mr. Nepomuceno said.

According to the central-bank’s website, as of Monday there were $86.9 billion in swap contracts outstanding, of which $9.7 billion will expire June 2. Brazilian bank Itaú Unibanco Holding SA on Tuesday said it expects just $4.6 billion to be rolled over, given the current pace.

“Therefore, maintaining these conditions, the central bank’s short dollar position through foreign exchange swaps will shrink in June,” Itaú said.