Brazil’s central bank reduced reserve requirements on short dollar positions held by local banks as it steps up efforts to buoy the real, the worst performing major currency this year. Starting Dec. 20, banks will be required to deposit in cash at the central bank 60 percent of their short positions in U.S. dollars above $3 billion, up from a previous limit of no more than $1 billion or any amount in excess of its capital base, the central bank said in a statement. The real was unchanged at 2.0986 per U.S. dollar at 9:42 a.m. local time. The government started this month loosening capital controls it imposed in the past two years after the real tumbled to a three-year low on Nov. 30 and the economy grew at half the pace forecast by economists in the third quarter. “This is one more measure that removes breaks put in place in the past, when the dollar was at 1.75 and people saw it going to 1.50,� Ures Folchini, the head of fixed income at Banco WestLB do Brasil SA in Sao Paulo, said in a phone interview. “Given the dollar is at a new level the government considers more acceptable, the central bank is cleaning house.� Brazil’s economy expanded 0.6 percent in the third quarter, the national statistics agency said Nov. 30, as government stimulus efforts failed to revive investment that fell for the fifth straight period. The growth number was lower than the forecasts of all 54 economists surveyed by Bloomberg whose median estimate was for 1.2 percent expansion. The real has weakened 11 percent this year, the worst performance among the 16 most-traded currencies tracked by Bloomberg. To contact the reporter on this story: Andre Soliani in Brasilia at asoliani@bloomberg.net To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

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